As a stocks and options trader we rely heavily on the stock chart. Everything the chart is showing us is valuable information and everything can be used to help us make a more informed decision. All traders have that burning desire to know if the price of the stock is going up or if it's going down. Of course, we have no way of knowing this. However, sometimes the answer to this majestic question is right there in front of us on our chart! Let's take a look.
Here is a 15 minute chart of AXP:
Looking at this chart I can tell you I immediately start to see patterns and trends. We have intra-day support and resistance lines as well as a steady trend line. Here's what I mean:
Check out that line! Now, typically we want to make sure our trend line hits at least three points on our chart. There's no disputing these lines though.
So, what does a trend line even mean? Well, it means that this is our "Support" if we get into a trade. Now, as mentioned above this is a 15 minute chart so when looking at the 15 minute we know this is multiple days of the stock running up.
If we had taken a position on January 31st, which is the far left of this chart, we may have not known there was a trend line there. However, once we had that first bounce that would tell us that this may be a point on our chart that we can use as an inclining support. So what do we do? We hold the trade to make the most amount of profit.
So we hold. Now the stock taps our trend line a third time and then shortly after a fourth time. This is very bullish for us because our trend line is increasing higher and higher. Soon higher lows will occur. We keep holding. In-fact we're going to hold this until the trend line breaks.
Strictly looking at this chart we'd be entering at $102 and exiting at $104 when the trend line is broken. That $2.00 move is huge in the options world. Here's what I mean:
Trend lines can be created on any interval time frame. However, the longer the time frame the more stable the support will be. The best way to find them is to constantly look at charts and try drawing lines. Soon you'll be able to quickly see the trending lines without any help or time spent starting at the candles.
I hope this was helpful! Feel free to share some trends you've found recently!