How does trendlines work?

<p>This link might help you get some knowledge regarding it:&nbsp;<a href="https://www.investopedia.com/articles/trading/06/trendlines.asp">The Utility of Trendlines</a></p>

<p id="isPasted">Trendlines work by connecting two or more price points (highs or lows) on a chart to visually represent the direction and slope of a trend, serving as a diagonal support or resistance level. In an uptrend, a line connecting higher lows indicates strong demand, while a line connecting lower highs in a downtrend signifies increased supply and selling pressure. Traders use trendlines to identify these trends, anticipate potential price movements, and find entry and exit points, though they are not foolproof and require adjustment as new price data emerges. &nbsp;</p><p>How They Work</p><p>Identification of Price Points: Traders look for significant "swing highs" (peak prices) or "swing lows" (valley prices) on a price chart.&nbsp;</p><p>Connecting the Points: A line is drawn connecting these price points.&nbsp;</p><p>Uptrend (Ascending Trendline): At least two higher lows are connected to form an upward-sloping line, showing consistent buying interest.&nbsp;</p><p>Downtrend (Descending Trendline): Two or more lower highs are connected to form a downward-sloping line, indicating persistent selling.&nbsp;</p><p>Support and Resistance: The trendline acts as a dynamic support (in an uptrend) or resistance (in a downtrend) level.&nbsp;</p><p>Support: In an uptrend, price is expected to bounce off the rising trendline.&nbsp;</p><p>Resistance: In a downtrend, price is expected to fall when it reaches the declining trendline.&nbsp;</p><p>How They Are Used by Traders</p><p>Trend Identification: Trendlines offer a clear visual confirmation of the prevailing direction of the market, be it up, down, or sideways.&nbsp;</p><p>Entry and Exit Points: Traders look for buying opportunities when the price bounces off an ascending trendline, and for selling opportunities when it reacts to a descending trendline.&nbsp;</p><p>Anticipating Reversals: A break in the trendline can signal a potential reversal of the prevailing trend, prompting traders to change their position.&nbsp;</p>