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Trendline

A straight line drawn along a series of rising lows or falling highs, used as a rough visual boundary of a trend.

An uptrend line connects at least two rising lows and is extended forward; a downtrend line connects falling highs. Two points define the line, but most traders want a third touch before treating it as meaningful, because any two points can be joined.

Traders use trendlines for three things: describing the angle of a trend, placing entries at a touch, and treating a decisive break as a warning that conditions changed. A steeper line usually means a move that cannot be sustained; a shallow line often marks a slower move that lasts longer.

Be honest about the weakness. Trendlines are drawn by hand, so two people rarely draw the same one, and the temptation to redraw a line after it breaks is enormous. Decide in advance whether you are using bodies or wicks, whether the chart is on log-scale or linear-scale, and never move a line just because price went the wrong way.

Related: trend-channel, trendline-break, support, resistance, log-scale

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Support, resistance and the flip between themA price path bouncing three times off a horizontal support line and turning back three times at a resistance line, then breaking above it and settling back onto the same level.RESISTANCESUPPORT62.0056.00breaks aboveold resistance,now supportIllustrative price path: the level stays the same, its role changes.
Support, resistance and the flip. Support is a price where buyers keep stepping in and the fall stops; resistance is a price where sellers keep stepping in and the rise stops. Once price closes above an old ceiling, that same level often acts as the new floor.
Trend structure: higher highs against lower lowsTwo zigzag price paths side by side; the left one steps upward with each peak and trough above the last, the right one steps downward with each peak and trough below the last.UPTRENDhigher highs, higher lowsHHHHHHHLHLHLDOWNTRENDlower highs, lower lowsLHLHLHLLLLLLHH higher high, HL higher low, LH lower high, LL lower low.
How a trend is built. A trend is just a sequence of turning points. While each peak and each dip sits above the one before it the market is trending up; once both start landing below the previous ones the structure has turned down.

Educational only, not advice. Spotted an error? Post in Site Feedback.