What It Is
Trendlines are diagonal lines drawn along swing highs or swing lows to visualize and define the direction of a trend. An upward trendline connects ascending lows; a downward trendline connects descending highs.
Key insight: A valid trendline needs at least three touches. Two points create a line; the third confirms it. Each additional touch increases the trendline's significance. When a well-established trendline breaks, it signals a meaningful shift in market structure.
Trendlines are subjective — different traders draw them differently. The best trendlines connect the most obvious swing points, are touched at least three times, and align with other technical evidence like support/resistance levels.
Trading With Trendlines
In an uptrend, buy when price pulls back to an ascending trendline and shows a reversal candle. The trendline acts as dynamic support. Place your stop below the trendline.
When price closes decisively below an ascending trendline (or above a descending one) with volume, the trend may be ending. A break followed by a retest that fails to reclaim the trendline is a high-probability reversal signal.
A trendline on the daily or weekly chart carries far more weight than one on the 15-minute chart. Use higher-timeframe trendlines for direction and lower-timeframe trendlines for entries.
Apply this concept in combination with others. No single concept tells the whole story - confluence is key.
Continue through core concepts
Compare this reference with related structures and readings before applying it to a live chart.