Validity of Trendline Penetration

Validity of Trendline Penetration

The application of the following three tests when a trendline is broken to determine whether the break is valid, or whether the trendline is still basically intact: (1) the extent of the penetration, (2) the volume of trading on the penetration, and (3) the trading
action after the penetration.

Source: Edwards, Robert and Magee, John.Technical Analysis of Stock Trends 9th Edition; (c) 2007.