Why Do We Use Trend Lines in Indices Trading?

traders use trend lines in technical analysis because prices move in trends and the best tool to interpret these trend are the trend lines that are to indicate the direction of the trend either upwards or downwards.

trend lines are also commonly used by traders because they are the most simple form of technical analysis that is used by many stock traders to determine where to open buy or sell trades.

Trend lines work by indicating the support levels of prices or the resistance levels of prices.

trading prices move in a series of support & resistance levels & these series of support & resistance pattern then forms a general market direction either upward or downward.

Traders use trend lines to depict these patterns on the price charts as shown on the example explained below:

Minor Resistance/Support levels

In minor resistance and support points the price will quickly form these points in the short term and quickly move past these resistance and support points during a trend.

Upwards Stock Trend: The upward trend pattern of this minor resistance and support points will form a sequence of levels whose general direction is upwards.

Why Do We Use Trend Lines? - How Do Trend Lines Work?

Down-wards Trend: The trend pattern of this minor resistance & support points will form a sequence of levels whose general direction is downward.

Down-wards Trend Series of Support and Resistance - Why Do We Use Trend Lines? - How Do Trend Lines Work?

Traders then analyze these trend line using trend line technical analysis to determine when & where to open a buy or a sell trade depending on the direction of the trend line.