Traders Toolbox: This often overlooked technical indicator is a winner

Posted on by The INO.com Team

Parallel trendlines

I am constantly amazed that some of the simplest tools available to technical analysts are often the most effective. One of these simple tools is parallel trendlines. I have used them to identify planes of support and resistance on the charts.

At times, these parallel trendlines will form channels. Commonly, a market will stay within a bounded channel for a sub- stantial period of time. However, these trendlines are not limited to channels of equal width. The weekly corn chart reveals a market which has followed the same angle, or plane, of movement for much of the past three years, but within channels of various widths.

There are three primary applications of this tool which are very useful. The first is to expect a market to respect existing parallel boundaries of support and resistance. Second is to expect a significant change in market action when a boundary is significantly violated. And third is to expect the market to eventually resume trading on a parallel plane at a new level. The weekly corn chart is a good example of all three applications.

2 thoughts on “Traders Toolbox: This often overlooked technical indicator is a winner”

  1. I don't know if you have something simple enough for me. Since I know nothing, all I want to do is follow directions such as what you illustrated on your 90 second videos, as long as it offers both long and short opportunities. Is there a place on your member site just for that; is it offered every day? Does it put recommended trades in front of you or do you have to enter symbols from your own watch list?
    Finally, I submitted some stock symbols for your quick trend analysis with the scores from -100 to +100. Your feedback was valuable, although I assume it was very short term oriented. Is there a way I can subscribe and just use those features?

    Warren,
    Thanks for your feedback. We do not slice and dice MarketClub up. You get the whole service for one very reasonable price. You also get a 30 day money back guarantee with the service.

    You can join here if you wish : https://secure.ino.com/products/marketclub/

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