Trendlines are an absolute mystery to me. I understand how to create them, I just don't understand the rationale. Taking a simple 2-point TL, if it is broken, the most common thing I see happen is people redrawing it keeping the older point where it is. IE, they typically adjust the later, more recent point
I don't like that either, but I have done it myself a few times. Nevertheless, I think it's to be avoided. But on your thought of "a simple 2-point TL" after much soul searching over the years I've come to feel that a valid trendline should have at least three touches, and the more the better.
As far as the "rationale" of trendlines, beside being a quick gauge of the directional trend of an issue, they sometimes appear to serve as another kind of support or resistance, the same as a moving average or even horizontal S/R. They're just one more type of "indicator" to throw into the soup, regardless of where they may be in one's hiearchy of such. |
