What is trend line?

A trend line is a straight line that is used to connect two or more price points on a line chart. It is an analytical tool that is used to identify patterns or trends in data, such as stock prices, sales figures, or economic data. A trend line can be used to determine the direction of a trend, the strength of the trend, and potential support and resistance levels.

Trend lines can be drawn using various methods, such as linear regression, moving averages, or simple visual analysis. They can be used for short-term or long-term analysis, depending on the time frame of the data being analyzed.

Trend lines can be helpful in making investment decisions or trading strategies. A rising trend line indicates an uptrend, while a falling trend line indicates a downtrend. Traders often use trend lines as a guide for making buy or sell decisions, for example, buying at the support level of an uptrend or selling at the resistance level of a downtrend.

However, it is important to note that trend lines are not always accurate and can be subject to false breakouts or price reversals. Therefore, it is important to use other technical indicators and fundamental analysis in conjunction with trend lines to make informed investment decisions.