Glossary
Trendline
A straight line drawn on a chart through a series of rising lows or falling highs to show a trend’s path and the level where it would break.
On this page
A trendline is a straight line that connects two or more price points to trace the slope of a trend. An uptrend line runs under rising lows; a downtrend line runs across falling highs. Traders draw them to see how steep a trend is, to find levels where a pullback might find buyers, and to mark the point where a trend would be considered broken.
How to draw one
Pick at least two clear swing points in the same direction, lows for an uptrend, highs for a downtrend, and extend the line to the right. A third touch that holds is what most technicians treat as confirmation. A parallel line through the opposite swings forms a channel.
What to watch for
Trendlines are subjective. Using closes or intraday extremes, or a linear or logarithmic price scale, changes the line, especially over long periods; log scale suits charts covering large percentage moves. Lines drawn through only two points fit almost anything.
The steeper the line, the sooner it tends to break, and a break does not always mean a reversal; a trend can simply flatten into a gentler slope or a sideways range. Many traders wait for a close beyond the line, or a retest from the other side, before acting on a break. As with support and resistance, a broken uptrend line often acts as resistance afterward.