Option Investor

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Fan Lines

When the market begins to establish a trend, technical analysts will often use trendlines to chart the movement of the stock. However, sometimes a stock makes several attempts at establishing a trend before settling into an actual pattern. Fan lines are best described as the trend lines that are drawn from the same point of origin, and "fan" across a stock's trading chart. This can be a result of several different scenarios. For example, investor euphoria may drive a stock to new heights. Once that euphoria dissipates, the stock may gradually descend to trade at a more sustainable level.