Chart Reading : Lesson - 2 (Part : 2)

Today, we will try to identify the Support and Resistance by Trend Line. Please look at the below Chart - 1 :

Chart - 1 (Pls. click on the image to enlarge)

As indicated in the Chart - 1 :
Line A : We have tried to draw Up Trend Support Line (Please see below to know how to draw a trend line).
Point B : After few months later, we found that price went up than our expectation. So, the Line A ended in Point B. Please note that now the Line A is invalid. End of this lesson we will discuss regarding invalid trend line.
Line C : As price went up than our expectation, Line C has been drawn which was New Up Trend Support Line.

How to draw a Trend Line :
It's simple. Just locate two major Top or Bottom and connect them and then extend the line to future days. Pls. look at the below Chart - 2 :

 Chart - 2 (Pls. click on the image to enlarge)

I hope the above Chart - 2 is clear. B is the first bounce. If the future price bounce back near the Trend Line 2nd time (1st time is point "B" in the chart) then we will get a confirmation that our Trend Line is Valid otherwise, it may be a invalid trend line. The more bounces off a trend line the stronger the trend.

Whenever we draw a trend line, we should keep in our mind that we will not draw a trend line by forcing them to fit with the Market

Now, please look at the below Chart - 3 :

  Chart - 3 (Pls. click on the image to enlarge)

I know, after seeing the Chart - 3, Some TA will come to kill me. Because, I've violated 1 basic rules of Channels. Actually, Channels consist of two parallel line. But our above Chart - 3, we did not follow it. Because, First of all, we are not a TA or a Indicators Operator, we are a simple Chart Reader. Secondly, we did it for our easy and clear understanding.

Now, we will see the Down Trend Support Line and Down Trend Resistance Line and also give a test. Please see the Chart - 4 :

  Chart - 4 (Pls. click on the image to enlarge)

Now, we will see Valid and Invalid trend line. Please, see the Chart - 5. Chart will say everything. No description this time.

  Chart - 5 (Pls. click on the image to enlarge)

Finally, Please note that I've taken the High or Low price to draw the trend line. You can take Pivot Point.

WoW!!! Aponi etokhani porey felechen. Allah aponakey valo-e dhorjo dhorar khomota diyechen. Best of Luck. by JC