Trendline
A straight line drawn along successive highs or lows to visualize a trend’s slope.
Also called: trend line
Written by Javier Sánchez Ros
In plain language
An uptrend line connects rising lows and acts as dynamic support. A downtrend line connects falling highs and acts as dynamic resistance.
Two points define a line; the third touch is what makes it worth anything. Until price has respected it more than twice, it is a guess with a ruler.
Trendlines are subjective. Small changes in which wicks you connect produce meaningfully different lines, which is why they work better as context than as precise trigger levels.
Worked through
Two trendlines drawn on one chart
- Line A: through the lows
- 3 touches
- Line B: slightly steeper
- 2 touches
- Price now
- above A, below B
- Verdict
- depends who drew it
Both lines are defensible and they disagree. This is the honest limitation of trendlines: unlike a horizontal level, which is a price anyone would read the same way, a diagonal depends on which points were chosen and how the chart is scaled. Two competent traders produce two different lines.
That does not make them useless, but it does change how much weight they can carry. A trendline is a way of visualising the rate of a move, and a break of one says the rate has changed — not that the trend is over, which requires structure to confirm.
The rules that reduce the ambiguity are simple. Three touches beats two. Connect extremes consistently — wicks to wicks or bodies to bodies, not a mixture. And draw the line once, before the trade, rather than redrawing it flatter each time price threatens to break it.
That last habit is the one that does the damage. A line that gets adjusted whenever it is about to be broken is not defining invalidation; it is following price, and a stop built on it will follow price all the way down.
Why it matters
A trendline break is a clean, visual way to define invalidation, especially for trades held through a sustained move.
Common mistakes
- Redrawing the line whenever price breaks it, so it can never be wrong.
- Using a two-touch line as if it were established support.
- Placing stops exactly on the line, where probes are most likely.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
A sustained directional bias in price, built from a repeating pattern of highs and lows.
A price area where buying has repeatedly been strong enough to stop a decline.
A price area where selling has repeatedly been strong enough to stop an advance.
When price moves decisively beyond an established support or resistance level.
The pattern of highs and lows that describes whether a market is trending or ranging.