Using trend lines can help you time entry and exits on your positions.

Take a look at the below chart of gold. As you can see, prices are behaving in an orderly, upwards trend.

The rising trend line acts as support and the top line is resistance. Project these trend lines out about 30 days and they will converge. What happens then or before then?

In my opinion, prices will break out higher to $1300 at least. What to do if you’re sitting in cash? you have two options: 1) Don’t take a chance and buy now at $1243, 2) wait until prices again test this lower support line around $1220, maybe $1210 if you’re lucky.

If you want to learn more about Trend Lines and the science of Technical Analysis, then download our Investing 101 eBook which contains an entire chapter on Technical Analysis filled with more examples and charts like the one above.