Trend Line Impact on Buy and Sell Signals

[YP Investors]

The current trend of a stock plays a major role in the outcome of buy and sell signals (a buy signal and the stock price goes up, or a sell signal and the stock price drops). This is one of the reasons why the first thing you should check in the point and figure chart is the trend line.

Is the chart currently in a positive or negative trend line?
If it is positive then the buy signals have a better chance of executing and the sell signals have less of a chance of executing. On the other hand if the chart currently has a negative trend line then sell signals have a better chance of executing and buy signals have less of a chance of executing.

Furthermore, with a positive trend line the buy signals are more likely to result in much higher prices than buy signals with a negative trend line. This is the same for sell signals, when they occur with a negative trend line then the price is more likely to drop much lower than if the sell signals occurred with a positive trend line.

Keep these tips in mind when using the point and figure charts for your investments.

• This topic was modified 1 year, 4 months ago by YP Investors.

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