Diagonal trend lines are a waste of time
Is drawing trend lines a pointless practice?
Trend Lines
I saw that quote on Twitter and it got me thinking…
Okay, so maybe this is just a post to get attention and engagement, but on a serious note:
- How do trend lines play a role in my strategy?
- Am I neglecting them?
- Or should I even be using them at all?
After a quick audit, I realised that honestly, I don’t use them a huge amount, but like everything it’s context…
Take the other day on Nasdaq.
A steady counter-trend intraday rally that kept within an uptrend line. VWAP tag and once it broke the trendline and got the confirmation ignition candle we were back to lows.
Seems a pretty reasonable way to judge if a move is over and a potential short could be on.
1 for common sense
0 for the Twitter trading bros
Ok, but what about when things aren’t quite as clear?
Same market, 60-minute chart.
There’s zero chance I’d put any weight on that line.
No way I’m buying a break of that, just because it broke the line I drew.
Twitter bros 1.
And this is where I think the ambiguity lies.
If you can argue about where you draw the trend line, which peak and how steep it is, IMO they have little use.
But if it’s super clear and a slight change in which candle you use as the tip makes very little difference to the line angle then I think they can be very useful.
A good trend line frames the natural rotations of that move and gives some visual representation of the higher highs and higher lows.
And that can be handy. Even as a filter.
“I won’t even consider a short until that trend line has broken”
Like everything in this business, it’s context context context.
I suggest running any chart analysis you do through a BS detector first.
“Does this make sense what I’m doing? Or am I taking the rules a bit too far”
Not a bad check to make before preparing to go full clip on your next trend line break…