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I read somewhere before that a trader in the USA made a lot of money over the years using only trendlines in his technical analysis. Yes, only trendlines. Nothing else.
This hints at the importance of trendlines and how they have an indispensable role in anyone's charting efforts. After all, don't we hear people saying stuff like "the trend is our friend" and "don't go against the trend"? The word "trend" keeps popping up in technical analysis.
So, we must know how to recognise trends if we want to improve our chances of success trading in the stock market.
If we look at Marco Polo Marine, it is obvious that the downtrend was broken towards the end of 2012 and it is now on an uptrend.
Drawing trendlines, we would see that its current uptrend is in two parts: an earlier trendline with a gentler gradient which I have labelled "T2" and a later trendline with a steeper gradient which I have labelled "T1".
Drawing these trendlines, we know where are the price supports which must hold for the uptrend to remain intact. Breaking these supports would possibly be a sell signal for some. Short sellers could also come in to push the share price down further.
For others, it would represent opportunities to load up at cheaper valuations but we want to load up closer to supports. Well, at least for me, I think that buying at supports in an uptrend is the way to go.
Today, my overnight buy order at 41c was filled.
Related posts:
1. Marco Polo Marine: Negative divergences.
2. Recommended books for TA.
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