Chartered Market Technician (CMT) Practice Exam

In technical analysis, the significance of trend lines is often associated with how long they remain in force. When a trend line is established and holds over an extended period, it suggests a stronger and more reliable trend. This is because trend lines represent underlying market sentiment; the longer a trend line has been respected, the more traders and investors are likely to view it as an important reference point.

A trend line that is valid over multiple time frames can indicate a robust trend, as it reflects a consensus between buyers and sellers during that time. This prolonged respect for a trend line can lead to greater confidence among market participants, resulting in increased trading volume and adhering to the established trend.

While steep angles, fewer data points, and multiple price level crossings can also be indicative of market behavior, they do not generally establish the same degree of significance in terms of reliability. A steep angle may indicate a sharp trend, but it could also be subject to quick reversals. Trend lines drawn from fewer data points might not accurately reflect the market's overall trend, making them less significant. Similarly, while crossing multiple price levels may suggest interaction with market sentiment, it does not necessarily add to the line's reliability without the context of time and sustained movement.