Chartered Market Technician (CMT) Level 1 Practice Test 2025 - Free CMT Practice Questions and Study Guide

A valid trend line requires at least two touches of the price action in order to confirm its validity. When a trend line has two or more points of contact, it demonstrates that the trend is established and recognized by market participants. This reinforces the idea that the price has responded to a particular level, suggesting that it holds significance and can be referenced for future price movements.

A trend line that only has one touch lacks confirmation and could easily be a random occurrence rather than an indication of a true trend. Volume spikes may provide insights regarding market strength or reversals, but they do not directly contribute to the validity of the trend line itself. Additionally, the absence of clear requirements undermines the very principles of trend analysis, which relies on identifiable patterns and contact points to gauge the direction and strength of trends. Thus, the requirement of at least two touches ensures that a trend line reflects a more reliable market sentiment.