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  • BoonHooi

Which is more significant, Horizontal lines or Trend Lines?


Morning everyone,

I thought of putting up an educational post here today. The question here is

"Is a Horizontal support or a Trend Line support more significant"

But first, let's start by stating a fact. A horizontal support cannot be defined with only a single line. Price will more often crack through the line, finds support and then bounces up. In another word, price does not get supported at a single level but instead at a zone. Price will even temporary crack below zones and then bounce up.

The most significant characteristics about Horizontal levels is that the price level does not change with time.

"For example : If the strong Horizontal resistance level is identified at say the 1.1050 level, once you mark this out, it stay the same. As price approaches the level again in either 1 weeks time, 1 month time or even 1 years time, the resistance level will still be at 1.1050"

Now let's move on to have a look at Trend Lines support and resistance. Have a look at the chart below. Price could possibly take 3 different paths towards the Resistance Trend Line

For Trend Lines, the price levels changes with time.

"For example, if price immediately moves up, the Resistance level will be at 87.50. For the 2nd and 3rd scenario is the price takes a longer time to move up, then the resistance level could be at 87.40 or even 87.30"

Conclusion :

Because of the fact that Horizontal levels does not change with time, traders naturally remember the levels and that makes it a more significant level as compared to a dynamic trend line support or resistance.

One last note here: As traders, we should assume that the resistance or support levels will hold until it is proven otherwise. Don't try to over predict the future moves.

"Your learning journey should never stop". I believe in continuous learning, in any discipline that you are involved in, trading included.

#horizontal #trendline

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