Weekend Market School

Today's Lesson: How to draw a trend line?

Hello friends, welcome to the Weekend Stock Market School! ✏️ Today we will learn the simplest yet most powerful tool of the chart: the trend line. Grab your coffee, we're starting.

1. What is it?

Think of it this way: Someone climbing a staircase steps each step higher than the previous one. The railing, leaning against the edge of that staircase shows the direction of the climb at a glance. The trend line is the railing on the chart.

Clear definition: A trend line is a line connecting at least two, ideally three significant lows or highson the chart.

• If the lows are rising and you draw the line below the lows: uptrend

• If the highs are falling and you draw the line above the highs: downtrend

• If there is no clear direction: sideways trend ( horizontal band)

2. Why is it important?

• Shows direction: The chart is full of noise; the trend line allows you to see the forest.

• Becomes support and resistance: An ascending trend line acts as dynamic support below the price, while a descending trend line acts as dynamic resistance above it.

• Signals change: If the price clearly breaks the line, this is the first warning that the trend is weakening or changing.

• Helps you build a risk plan: The line gives a concrete answer to the question, "Up to what point on the chart would my opinion change if it reverses?"

3. How to Read / Use?

Let's take it step by step:

1. Look at the big picture. First, read the sequence of peaks and troughs. Are the troughs rising, are the peaks falling, or is it mixed?
2. Choose two meaningful points. Use the troughs and peaks that are "turning points" on the chart, not the sharp spikes at the extremes.
3. Draw consistently. Always pass the line through the wick ends or always through the closes; do not mix the two.
4. Wait for the third touch. If the price touches the line a third time and reacts, the line is now considered "valid".
5. Evaluate the breakout with the close. Touching with the wick is not meaningful; closing the day beyond the line is more significant.
6. Pay attention to the slope. Very steep lines break easily; healthy trends usually have a "livable" slope.

📌 Extra reading: Some platforms give you two auxiliary data points:

• r (correlation): + If close to 1, it means a strong linear rise; if close to -1, a strong linear decline; if close to 0, the direction is weak or sideways.

• Channel (%): It gives an idea about the width of the band in which the price fluctuates. A high channel means a sharply volatile course.

4. Real Example

Let's read these values with today's three active stocks:

• ASTOR: Last price TRY 164.90, daily change -9.99%. Correlation r = -0.80. This value is close to -1, meaning the price has recently been in a clearly descending, orderly course . On this chart, we would draw the trend line from above by connecting the peaks . The channel is 19%, so the fluctuation is also wide; touches on the line can be sharp.

• TRMET: Last price TRY 120.00, daily change -6.18%. But r = -0.03, i.e. close to zero. There is no linear trend; the price is swinging left and right. The channel reading is also very low at -4%. Don't force a trend line here; drawing a horizontal band is a more accurate reading.

• GUBRF: Last price TRY 372.75, daily change -5.51%, r = -0.16, channel 10%. Weak negative correlation: a slight downward tendency is felt, but this is still insufficient for a clear trend line. One needs to watch for the bottom and top sequence to become clearer.

The key point of the lesson: There is a daily decline in all three stocks, but none of the trends are the same. Don't look at a single day; the r value and the dip-peak sequence are always read together.

5. Common Mistakes

• Fitting the line to the price: " Twisting and bending it by saying "if I'm used to it, let the line be like that too" ruins the analysis. Let the line tell you the chart; don't impose yourself on the line.

• Settling for two points: Two touches are not yet proof; wait for the third touch.

• Mistaking a single day's move for a breakout: A harsh day is not a trend change. Look at the close and the following sessions.

• Mixing up time frames: A downtrend on the daily chart can be a horizontal band on the weekly chart. Determine which time frame you are working on from the start.

6. Mini Test

Question 1: In an uptrend, which points do we connect to draw the trend line?

Answer: Successively rising lows. The line runs below the prices and acts as dynamic support.

Question 2: If a stock's r value is -0.80, what does that tell you?

Answer: - Strong negative correlation close to 1; the price is in a declining, linear path. The trend line candidate would be a line drawn from above connecting the peaks , as in today's ASTOR example.

Question 3: If a stock falls 9.99% in a single session, can we say the trend is broken?

Answer: By itself no. The trend is the product of multiple troughs and peaks. For evaluation, the relationship with the line, the close, and the confirmation of subsequent sessions are considered.

7. Summary

• The trend line is the straight line connecting significant troughs and peaks; two points are the start, the third touch is confirmation.

• In an uptrend, troughs, in a downtrend, peaks are connected; if there is no direction, draw a horizontal band.

• If r is close to +1 or -1, the trend is clear; if close to 0, the movement is sideways.

• A single-day sharp move is not a trend change; look for a close and confirmation.

• Do not fit the line to the price; be consistent in your wick-body selection.

This lesson is for educational purposes, not investment advice.