Trendlines

This is a discussion on Trendlines within the Technical Analysis forums, part of the Methods category; Hi Guys, A bit of a basic question, but I am looking for some confirmation on this.... I have always ...

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Old May 25, 2007, 3:57pm   #1
 
ceydababy's Avatar
Joined Apr 2007
Trendlines

Hi Guys,

A bit of a basic question, but I am looking for some confirmation on this....

I have always believed that when drawing a trendline you should count along 8 candle sticks from the start of the trend and then replot at the 16 candlestick mark to plot a 'real' trendline.

Is this true ??

Or am I on the wrong track....any pointers on how to draw the textbook (if there is such a thing) trendline would be much appreciated.

Thanks in Advance

Mark
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Old May 29, 2007, 8:53am   #2
Joined Jul 2003
Formal trendlines require connecting in an uptrend the lows and in a downtrend the highs. Others will suggest that using only the Closes will do. While others will swear by using the arguably much more subjective internal trendlines.

The other issue to consider is how many points should touch the trendline before it's considered a trendline to which most will suggest three as a minimum and how many intervening points (candles/bars) should there be between these trend-touching points.

Personally, if you're following all the 'rules' you're not looking at a potential new trend until after a higher high and a higher low (for a new uptrend) or a lower low and lower high (for a new downtrend). This is all cases gives you the first 2 points of any potential new trend. It also, which is less commonly know, gives you a high probability method of determining when the next trend-point will form, and as importantly, when it hasn't.

It's rarely a case of a fixed number of intervals.
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