Diagonal trend lines are drawn to both portray and project the trend of the market, and also help to indicate the possible end of a trend. Diagonal trend lines help the trader anticipate where support or resistance may develop in a trend in the future. Figure 10.10 of October 90 cotton is an example of a diagonal support line. The line is drawn from the two support points near 65.50 on March 28 and 66.50 on April 9. Notice how the sell-offs, in the weeks of May 14 and 21, at 69.50 and 70.50, are contained by the support line. The major sell-off in July is again supported at the 74.00 level, but the August decline finally breaks the line. The diagonal support lines first portray the trend as going up, and then project where support may materialize. The lines show where the bullish trend is ending and, possibly, the beginning of a congestion phase or bear trend.

An example of a diagonal resistance line is drawn from the two resistance tops in early and late May. The market rallies in July and finds a first area of resistance from the line. The resistance lines portray the downtrend and project where resistance may occur. They show where the bearish trend is ending, and the beginning of a congestion phase, or possible bull trend.

Does a horizontal line have to be exactly 180 degree, or when is a horizontal line a diagonal trend line? A better question is, does it matter? Technicians and traders often get caught up in trying to make an exact science out of an abstract art. These subjective studies are not rigid definitions, but should be used as guidelines for trading. The trader should use the studies as an aid in trading, not as inviolable rules which must be followed.

Support and resistance lines may be used with support and resistance points. Both may provide excellent reference levels for entry and exit points in trading.