Trend Line Break

Trend is your friend. Dance with your friend. Tune to the trend.

Trend Line Break is a reversal chart patterns, where a stock in an up trend, breaks out of a support trend line and a stock in a down trend, breaks out of a resistance trend line. This is a very basic, simple, time tested chart pattern, which with an addition of a trend following indicator, gives an excellent result.

Pattern Formation
First learn to draw Trend Lines. Draw resistance trend lines in a down trend and support trend trend lines in an up trend. When ever a trend line broken out by the moving stock price, we get trading opportunity.

Volume invariably rises at the break out point, which indicates a strong trade.

Study the charts given below.

trend line break, chart patterns

See how all the trades are profitable. This being an up trend, taking long trades at the break out of resistance trend lines, gives more profitable trades. (Go with the trend).

How to trade?
Trade minor trend breakout in the direction of an intermediate trend or trade intermediate trend breakout in the direction of a major trend. Use an indicator to go with a trend. Wait for the break out bar to close. Then only sell below the low of the support breakout bar and buy above the high of the resistance breakout bar.

Would you like to know, what happened after the last bar in the above example?

Click here.

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