Sunshine attempted to draw this particular line, okay? So she felt that because the peaks touch this line more often compared to this, that’s why she felt that this is a more valid chart to draw. So again, I want to emphasize when drawing trend lines, my preferred way of drawing, not to say that there is definitely a right way, but I would suggest that that is generally the better way to do it, is that when you draw trend lines, you want to draw trend lines that price doesn’t exit or protrudes beyond, okay?
And that is the reason why, if you take a look over here, if this is the highest price average, instead of drawing a trend line down here, the right way should actually be drawing a trend line here, the first trend line. And then you see whether it becomes steeper or it become even gentler from there.
If it becomes even steeper, that is where you continue to draw a line that is steeper from there, okay? So do you see that in this case, based on the way that I’ve drawn over here, you realize that the peaks have never exit any of the two lines? Until this point, when he exits the whole trend has totally changed. Because the whole purpose of drawing trend line is to identify whether the major trend has changed or not, right? So if you attempt to draw a line like that through here, how would you be able to know whether the trend has changed or not? Very hard, right? Because your price is constantly crossing above, crossing below, crossing above, crossing below. Alright?
That’s the reason why when drawing trend lines, you need to try to draw it on the most outer boundary as possible. So you can draw multiple trend lines. Trendlines can become steeper over time. They can become gentler over time. But, as much as possible, try not to draw your trend line crossing over the price all the time.
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