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Great site Kenny.

Technical Analysis written in a straightforward way so that everyone understands.

There's only a small few who get it consistantly correct and you are certainly in that group. Chris

Thanks for putting this all together and sharing! BHW

Awesome Stuff! Kenny has shown time and time again the ability to show us direction in these markets. Khalsa

Kenny, I appreciate your insight and analysis. You make sense of what I can rarely see.

Thanks for sharing.

Took a gold short at 1240 just closed at 1203 :-)))))))))))))))))) ........ top call!!  Gekko

Trend Line Trading Technical Analysis of Stock Trends 

Trend Trading

Trend Line Trading

This is  part 2 of Trend Trading and is a continuation from our  trend line trading example so that we can try to answer the 'who is buying up here'  and 'isnt technical analysis just hindsight trading' questions.

The initial example trendline analysis chart was published here in real time and this updated chart is also published here real time.

Trading Trend Lines

In part one of this technical analysis of stock trends tutorial, we explained the trading strategies we use for entering and exiting trades when  trading using trendline analysis. This the updated chart overview as of yesterdays close. We have removed all but the last buy and sell trigger levels to clean up the chart a bit.

As you can see, trend traders following this trendlines analysis strategy would still currently have 5 long positions (buys) open from where we left off, since the stop level at S5 has never been breeched.   
Learn How to Trade Stock Market Investing
trend line trading
Technical Analysis of Stock Trends

So - ' Who is buying up here? '

This is why trend line trading works, and can be so profitable. With 5 trades already well into profit the trader has very little to lose and a huge amount to gain by adding to their position as the trend develops.Large institutional traders who have the resources behind them to move markets by the volumes of buying they are doing, have a vested interest in keeping this trend going for as long as possible.

Trend trading traders and short term traders will continue to buy each dip in the market and continue raising their stop levels as they go (B6-S6, B7-S7 etc).

With a number of profitable positions under your belt, profits are now increasing at  a considerable rate and until prices break below the lower trend lines (as a conservative stop), or a sell level is triggered, there is very little risk involved and much to gain.

trend line trading
Technical Analysis of Stock Trends
Traders tip - The optimum strategy for any technical analyst is always to let the market dictate when to enter and exit a trade. If we guess that the trend has reversed before a sell signal triggers then we run the risk of leaving a large part of the move on the table, perhaps even  the largest part of the move.

When does it end

The short answer is - who knows? There is no way to know for sure how long that trend will go on for. technical analysts will need to see a topping pattern (stock chart patterns) for a sign of weakness, and even then, that needs to be confirmed by a break of the support levels where we have placed our stops on these charts.

Tip - Ask any kid with a ruler which direction the chart is going in and whether they would buy it or sell it.

Go back to the original Trend Line Trading example

Traders tip -  A topping pattern is a distribution period created when buyers have backed off or are taking profits, and sellers are entering the market. This is a consolidation phase where neither buyers or sellers can gain control of the market.

Technical Analysis of Stock Trends - Conclusion

So the question was 'isnt technical analysis just hindsight trading'?

I will leave you to answer that one for yourself - you know what I think and I hope I have explained the logical reasons why trend line trading works.

Trend Trading 3  -  Trend Reversals

trend trading
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