How trendlines work?

<p id="isPasted">Trendlines are a fundamental tool in technical analysis, used by traders to visually represent the prevailing direction of an asset's price movement. Here's how they work:</p><p><strong>1. Identifying the Trend:</strong></p><ul><li><p>Trendlines are drawn on price charts, connecting a series of highs or lows to depict the overall trend.</p></li><li><p>Uptrend:&nbsp;A rising trendline connects consecutive lower lows, indicating an upward price movement.</p></li><li><p>Downtrend:&nbsp;A falling trendline connects consecutive higher highs, indicating a downward price movement.</p></li></ul><p><strong>2. Support and Resistance:</strong></p><ul><li><p>Trendlines act as areas of support or resistance, where price action is likely to pause or reverse.</p></li><li><p>Support:&nbsp;A rising trendline serves as support, potentially preventing the price from falling further.</p></li><li><p>Resistance:&nbsp;A falling trendline serves as resistance, potentially preventing the price from rising further.</p></li></ul><p><strong>3. Confirmation and Breakouts:</strong></p><ul><li><p>The validity of a trendline is confirmed by the number of touches it receives without breaking.</p></li><li><p>Breakouts:&nbsp;When the price breaks above or below a trendline, it could signal a potential change in the trend direction.</p></li></ul><p><strong>4. Subjectivity and Limitations:</strong></p><ul><li><p>Trendlines are subjective and open to interpretation, as different traders might draw them differently.</p></li><li><p>They are not foolproof indicators and should be used in conjunction with other technical and fundamental analyses.</p></li></ul><p><strong>Additional Points:</strong></p><ul><li><p>Angles:&nbsp;Steeper trendlines are generally considered less reliable than flatter ones.</p></li><li><p>Multiple Timeframes:&nbsp;Trendlines can be applied to different timeframes, from short-term charts to long-term ones.</p></li><li><p>Channels: Two parallel trendlines, one above and one below, can create a channel, further illustrating price movement within a certain range.</p></li></ul>

<p>Trendlines are one of the simplest—but most powerful—tools in technical analysis. They help you understand the direction of the market, identify potential buy/sell zones, and spot trend reversals early.</p><p id="isPasted"><strong>Trendlines Act as Dynamic Support and Resistance</strong></p><p>Unlike horizontal levels, trendlines move with price.</p><p>Trendlines tend to:</p><ul><li>Bounce price</li><li>Stop price</li><li>Provide entry points</li><li>Warn about reversal if broken</li></ul><p>This makes them extremely useful.</p>