• October 12, 2010

How to Find and Draw Trade Stock Trendlines

by Donald Harder

How does a trader go about finding major support and resistance levels?  One way is to draw trendlines on the chart.  It is often possible to find the direction a stock is headed by connecting the price tops and bottoms on a chart.

If a stock appears to be going down in price, connect the price tops like so:

If the stock appears to be going up in price, then connect the price bottoms as follows:

The important rule to remember about trendlines is that you can look to the line to determine support or resistance levels.  *If the trendline is broken, it is possible that a trend reversal has taken place:

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