What is the main purpose of using a trend line in technical analysis?

The primary purpose of using a trend line in technical analysis is to identify potential support and resistance levels. Trend lines are constructed by connecting the significant peaks or troughs on a price chart, which helps traders understand the overall direction of the market (upwards, downwards, or sideways) and visualize the price dynamics over time.

When a trend line is drawn along the lows in an uptrend, it can act as a support level, suggesting that price may bounce back up from that line. Conversely, a trend line drawn along the highs in a downtrend can signal a resistance level, indicating where the price may struggle to move higher. Identifying these levels is crucial for making informed trading decisions, like setting entry or exit points.

In the context of the other options, predicting future interest rates and determining corporate earnings relate more closely to fundamental analysis rather than technical analysis. Additionally, gaining insight into economic indicators also leans towards fundamental analysis, focusing on macroeconomic data rather than price movements on a chart. Thus, the identification of support and resistance levels is the key utility of trend lines in technical analysis.