Blockchain and Cryptocurrency Advanced - About Trends and Trend Lines and Their Role on Charts
What is a Trend?
In the cryptocurrency space, trend and trend lines are two of the popular terms that is mostly used by technical analysts. A trend is basically the direction a cryptocurrency market is moving in a period of time. The trend in the market indicates the direction that the price of any cryptocurrency in the market is moving. In the crypto space, there are 3 types of trends namely; uptrend, downtrend and sideways trend.
Uptrend
Uptrend is basically a trend in the cryptocurrency market where the overall direction is moving upwards or price of any cryptocurrency is moving in an upward direction, creating successive higher-highs and higher-lows.
Downtrend
Downtrend is basically a trend in the cryptocurrency market where the overall direction is moving downwards or price of any cryptocurrency is moving in a downward direction, creating successive lower-highs and lower-lows.
What is Trend Lines?
Trend line is basically a very common tool used in technical analysis that is drawn on a cryptocurrency price chart, clearly showing the direction the market is moving or the trend in the market. Trend lines are recognizable lines that is drawn on a chart, connecting a series of price points in a cryptocurrency price chart that shows the price movement and direction of the market. Trend lines indicates if the market is in an uptrend or a downtrend as it is a line that connects the higher-lows in an uptrend direction and lower-highs in a downtrend direction.
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BNB/USDT Chart
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ETH/USDT Chart
What is their role in charts?
The main role of a trend line in a chart is to help identify or determine the direction the market is moving. Simply put, a trend line helps to identify the trend in the market. Depending on the slope direction of the trend line, it can help identify whether the market is moving in an uptrend or a downtrend. If the trend line connects two or more higher-lows, it can indicate that the market is moving in an uptrend direction. If the trend line connects two or more lower-highs, it can indicate that the market is moving in a downtrend direction.
Also, the role of a trend line in a chart is to help traders determine when to enter or exit a trade. Simply put, a trend line on a chart can help determine when to buy or sell a cryptocurrency based on the slope direction of the trend line.
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