Neck Line
A neck line is a technical analysis tool used in stock trading to identify potential reversals in the price of a security. It is formed by drawing a line connecting two or more peaks or troughs on a chart. If the line is broken, it can signal a potential reversal in the trend. The neck line is often used in conjunction with other technical indicators to confirm a reversal.
History of the Neck Line
The neck line was first developed by Charles Dow, the founder of Dow Theory. He believed that the stock market moved in trends, and that these trends could be identified by looking at the peaks and troughs of the price action. He used the neck line to identify potential reversals in the trend. The neck line has since become a popular tool among technical analysts.
Comparison Table
| Indicator | Signal |
|---|---|
| Neck Line | Potential Reversal |
| Moving Average | Trend Direction |
| Relative Strength Index | Overbought/Oversold |
Summary
The neck line is a technical analysis tool used to identify potential reversals in the price of a security. It was developed by Charles Dow and has since become a popular tool among technical analysts. For more information on the neck line and other technical indicators, you can visit websites such as Investopedia, The Balance, and Investing.com.
See Also
- Head and Shoulders
- Double Top
- Double Bottom
- Moving Average
- Relative Strength Index
- Bollinger Bands
- MACD
- Stochastic Oscillator
- Parabolic SAR
- Fibonacci Retracement
