Charts tend to form primary bottoms and tops and secondary or interior bottoms and tops along the way to their next top or bottom in price. On longer term charts these characteristics are easily seen and can be helpful in plotting trade points along the way. The angle of their ascent or descent can tell you much about how rapidly they may gain or lose price.
The greater the degree of ascent or descent we can expect a greater degree of volatility along the way to the point at which the stock or market turns around at.
Stocks can linger in trading ranges for weeks, months or years, at times, when they are finding a base or are distributing their shares. It is important to define this range that traders are willing to price into and out of a position so you can buy the breakout or breakdown. In defining this range one will not be so easily tempted to trade it until the signal comes that it is beginning its breakout.
Active traders or scalpers can trade these areas in a way the long term trader cannot comfortably do so. It must be noted also that scalpers assume more risk for the profit they expect to make than a longer term trader. While there is good money to be made for some in these markets the vast majority of investor/traders function more comfortably in a longer term trading environment.
Using trendlines to define market direction is perhaps the simplest of chart/art forms we can work with in gauging market timing direction and sentiment.
