The relative steepness of the trendline gives the trader important information regarding the trend. He may choose to draw a 45 degree line (line 2 below) on his chart from a prominent high or low point and use it as the major trendline, reflecting a situation where prices are advancing or declining at a rate where prices and time are in perfect balance. This technique can be used in any type of trading

Since we know most valid trendlines rise at an approximate 45 degree angle (line 2 below), we can assume the following statements to be true:

- If the trendline is too steep (line 1 below), it usually means the prices are advancing much too fast and shouldn't be expected to sustain their rate of ascent.

- A trendline that is too flat (line 3 below) usually indicates a weak uptrend that can't be trusted.



Andy Swan is co-founder and head trader for DaytradeTeam.com. To get all of Andy's day trading, swing trading, and options trading alerts in real time, subscribe to a one-week, all-inclusive trial membership to DaytradeTeam by clicking here.