The Dilemma: Minor or Major Reversal
Investors tracking prices on charts have many tools available to them for determining whether a trend is continuing or growing weaker. For example, the use of trendlines, channel lines, Bollinger Bands, other statistical tests, and observations of price in proximity to resistance and support all help to spot a trend’s long-term health.
After the price activity diverts from an orderly and identified trend, it is likely to signal a coming change. That might be represented by a period of consolidation or outright change in a trend’s direction. Trendlines and channel lines track the direction and duration of the trend, and they set up a disciplined and predictable course, until it all changes. Once the trendlines ...
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