The Trend Is Your Friend
At mid-morning today, the Dow Jones Industrial Average is up 22.49% for a one-month period--but down 6.52% over six months. Is there a trend to be found? And if so, what is it?
Trend lines are one of the fundamental tools used in investment technical analysis. In fact, technical analysis is totally predicated on the idea that prices trend in some direction or another.
Unfortunately, there's no trend-line industry standard. People have passionate but disparate ideas about how they should be drawn and interpreted. This link gives a reasonably simple spin on "the proper way to draw a trend line."
This link examines the concept and its implementation in greater detail, introducing dangling prices, price interference, reistance points, trend line breaks, etc.
Remember that the sites I have noted, although fairly mainstream, certainly don't represent every shade of opinion. As with many contentious subjects, the Internet tends to be something of a free-for-all about this, so you may want to retreat to the more measured approach taken by The Investor's Guide to Technical Analysis, High-Powered Investing for Dummies, Technical Analysis for Dummies, or some of the other books available at The Library.
Find this article at http://thelibrary.org/blogs/article.cfm?aid=302&lid=52