The drawing of trend lines

In discussion of intraday charts, it was pointed out that trend lines were drawn in the conventional way. This is not the case on these 3 point reversal charts. Trend lines on these charts are drawn at 45 degree angles. Also, trend lines do not necessarily have to connect previous tops or bottoms.

The Basic Bullish Support Line and Bearish Resistance Line

These are your basic up and down trend lines. Because of the severe condensation on these charts, it would be impractical to try to connect rally tops or reaction lows. The 45 degree line is, therefore, used. In an uptrend, the bullish support line is drawn at a 45 degree angle upward to the right from under the lowest column of o's. As long as prices remain above that line, the major trend is considered to be bullish. In a downtrend, the bearish resistance line is drawn at a 45 degree angle downward to the right from the top of the highest column of x's. As long as prices remain below that down trend line, the trend is bearish.

At times, those lines may have to be adjusted. For example, sometimes a correction in an uptrend breaks below the rising support line after which the uptrend resumes. In such cases, a new support line must be drawn at a 45 degree angle from the bottom of that reaction low. Sometimes a trend is so strong that the original Up trend line is simply too far away from the price action. In that case, a tighter trend line should be drawn in an attempt to arrive at a "best fitting" support line.