06-23-2021, 01:56 PM
Why do stocks follow trendlines so well?
<!-- SC_OFF --><div class="md"><p>When you collapse a chart into as narrow (low resolution) as is practical, that you can draw a trend line right down the length of the price.</p> <p>When you then expand that chart to a normal resolution of price, the trend line is fairly unbiased.</p> <p>Why is it then, for trends, stocks trade so accurately against this trend line?</p> <p>Price fluctuations in general appear pretty happenstance but for the most part, the price returns to the trend. </p> <p>Is it a sort of self fulfilling prophecy? Institutional traders use them and so that acts like a magnet?</p> <p>What is the theory behind trend lines modeling price in the near term?</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/DarthTrader357"> /u/DarthTrader357 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/o670r6/why_do_stocks_follow_trendlines_so_well/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/o670r6/why_do_stocks_follow_trendlines_so_well/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>When you collapse a chart into as narrow (low resolution) as is practical, that you can draw a trend line right down the length of the price.</p> <p>When you then expand that chart to a normal resolution of price, the trend line is fairly unbiased.</p> <p>Why is it then, for trends, stocks trade so accurately against this trend line?</p> <p>Price fluctuations in general appear pretty happenstance but for the most part, the price returns to the trend. </p> <p>Is it a sort of self fulfilling prophecy? Institutional traders use them and so that acts like a magnet?</p> <p>What is the theory behind trend lines modeling price in the near term?</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/DarthTrader357"> /u/DarthTrader357 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/o670r6/why_do_stocks_follow_trendlines_so_well/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/o670r6/why_do_stocks_follow_trendlines_so_well/">[comments]</a></span>Kind Regards R