Up Trend Line
An up trend line has a positive slope
and is formed by connecting two of more low points. The second low must be
higher than the first for the line to have a positive slope. Up trend lines
act as support and indicate that demand is increasing even as the price
rises. A rising price combined with increasing demand is very bullish and
shows a strong determination on the part of the buyers. As long as prices
remain above the trend line, the up trend is considered solid and intact. A
break below the up trend line indicates that demand has weakened and a
change in trend could occur.
Down Trend Line
A down trend line has a negative slope
and is formed by connecting two or more high points. The second high must be
lower than the first for the line to have a negative slope. Down trend lines
act as resistance and indicate that supply is increasing even as the price
declines. A declining price combined with increasing supply is very bearish
and shows the strong resolve of the sellers. As long as prices remain below
the down trend line, the downtrend is considered solid and intact. A break
above the down trend line indicates that net-supply is decreasing and a
change of trend could occur.
