Trends define the overall direction of prices and can be up, down, or sideways. Trends are influenced by investor psychology as emotions of fear and greed drive buying and selling. An uptrend is identified by a series of higher highs and higher lows, while a downtrend shows lower highs and lower lows. A trend line connects a series of highs or lows to identify the trend. Channels represent trading within parallel support and resistance lines. Support and resistance levels occur at price points where buyers and sellers are equally powerful, halting price movement temporarily until one group dominates. The significance of support and resistance increases with the length of time prices trade within the area and the volume of trading that has occurred there

1. Charting
Trend line & Channels

2. Trend Line
Section I – 39%
Trends
Trend Lines
Channels
 Support & Resistance Lines

3. Trend
• Trends define a direction in prices
• Directional trend,
- one of rising or
- falling prices from which a profit can be generated with a trend-following
method.
- Sideways trend as a "trading range" or "neutral" area.
• Trends are fractal (According to Dow Theory)
- Major Trend – above one year
- Intermediate Trend - 3 weeks to many months
- Minor term Trend – below 3 weeks

4. How Does Investor Psychology Impact Trends?
Power of the
buyers or sellers
Aggressiveness or
anxiousness of
buyers and sellers
Emotions of fear or
greed propelling
their action
Broad expectations

5. Trend
Uptrend (Series of
Higher Top & Higher
Bottom)
Action : Buy on Dips
Down Trend (Series of
Lower Top & Lower
Bottom)
Action : Sell on Rise
Sideways/Consolidation
Trend – Same Top &
Same Bottom or Lower
Top & Higher Bottom
Series

6. Trend
Up Trend Down Trend
Sideways Trend

7. Trend line
A straight line that
connect a series
of security price
Line either touch
from top or
bottom
Line must touch
two tops or
bottom
Trend line is in
continuation until
it breaks

8. DETERMINING A TRADING RANGE
 Trading ranges (or sideways trends) occur when peaks and troughs appear roughly at similar
levels.
 A trading range also is called a consolidation or congestion area or a rectangle formation.

9. Trend line

10. Channels
 The price action contained
between two parallel lines
in a trend.
 The two lines of a channel
represent support and
resistance.
 Trend, or price channels,
 Upward Channel
 Downward Channel
 Sideways Channel

11. What is Support & Resistance ?
• When prices have been rising and then reverse downward, the highest point in the rise,
the peak, is referred to as a "resistance level.“
• It is the level at which sellers may be as powerful and aggressive as buyers and stop the
advance.
• When the sellers (supply) become more powerful and aggressive than the buyers
(demand), the result is a subsequent price decline from the peak
• A resistance level becomes a resistance zone when more than one resistance level
occurs at roughly the same price. Prices rarely rise and stop at exactly the same level
• A single, high-volume price peak often defines a resistance level, but even then,
because the high volume, especially if preceded by a sharp price rise, is a sign of
speculation and emotion, the price where large sellers actually began to enter the
market is not clear.

12. What is Support & Resistance ?

13. What is Support & Resistance ?

14. How Support & Resistance Reverse Their Roles?

15. The Psychology of Support & Resistance
• The longer the period of time that prices trade in a support or
resistance area, the more significant that area becomes
• Volume is another way to measure the significance of support &
resistance
• Third way to determine the significance of a support &
Resistance area is how recently the trading took place.

16. Why Do Support and Resistance Occur?
• "Have you ever bought a stock, watched it decline in price, and
yearned to sell out for what you paid for it?
• Have you ever sold a stock, watched it go up after you had sold
it, and wished you had the opportunity to buy it again?
• Well, you are not alone. These are common human reactions,
and they show up on the stock charts by creating support and
resistance."

17. Trading Rules for Horizontal Support and Resistance Levels
• Buy when prices move above the
horizontal resistance line
• Sell when prices move below the
horizontal support line
• Once a long position has been
entered, it is not closed out until
prices move below the support
line.
• The maximum risk of the trade is
the difference between the
support and resistance lines.