Trend lines, which connect two or more stock price points, are a key aspect of technical analysis, defining price movement and indicating entry and exit points. Trend line support is an area that a stock's share price has difficulty moving below, the opposite of resistance, which indicates an area that the price has difficulty moving above. Identifying support levels can give traders insight into when to pull the trigger on a trade and how to minimize downside risk.
Trend line support is forecast by a positive-sloping trend line based on the formation of increasing support levels as time has progressed. Horizontal support, a type of trend line support, occurs at a point at which many buyers have historically entered a stock, thereby consistently buoying the price at that level.
Generally speaking, buying opportunities exist when a stock bounces off a long-term trend line, and shorting opportunities exist when a stock breaks downward through a long-term uptrend line.To learn more about trend line trading and the different kinds of support levels to watch for, read our technical primer on trend line support.
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