Trendline
A trendline is a straight line drawn through at least two swing lows in an uptrend, or two swing highs in a downtrend, to show the trend's slope.
A trendline is the simplest tool in technical analysis: a straight line along the lows of an uptrend or the highs of a downtrend.1 It makes the trend’s direction and pace visible, gives a reference for buying pullbacks, and warns when the trend may be ending. It is also one of the easiest tools to misuse, because almost any chart can be made to fit a line. This entry shows how to draw trendlines honestly and what a break really tells you.
- Category
- Price Action
- Reading time
- 5 min
- Also called
- Trend line, Uptrend line, Downtrend line
- Updated
A trendline in plain words
In an uptrend, connect two or more lows, each higher than the one before; in a downtrend, connect two or more highs, each lower than the one before.2
Two points are enough to draw a line, but a third touch is what confirms it; more touches add validity.2 The line then acts as a rising floor (or falling ceiling) that price may react to.
How to draw and use a trendline, step by step
Identify the trend first
Trendlines describe an existing trend; draw them only when higher lows (or lower highs) are clear. See Trend.
Connect clear swing points
Use obvious swing lows in an uptrend or highs in a downtrend; do not force a line through points that do not line up.2 See Swing High and Swing Low.
Wait for the third touch
A third touch confirms the line.2
Watch the angle
Very steep lines from sharp moves are less reliable and break more easily.2
Use it for entries and stops
Pullbacks to a confirmed rising line are common entry points, with a stop below the line or the last swing low. See Pullback.
Treat a break as a warning
A break suggests the trend may be changing, not that it has; confirm with other evidence such as support and swing structure.2
Worked examples
Example 1 — Projecting a trendline
ProjectionSwing lows at $40 (week 0) and $45.50 (week 4) define a line rising $1.375 a week.
| Slope | ($45.50 − $40) ÷ 4 = $1.375 a week |
| Projected line at week 8 | $40 + 8 × $1.375 = $51.00 |
| Week 8 low | $51.00 — third touch, line confirmed |
Projecting the line in advance turns it into a plan: where to look for a pullback entry.
Example 2 — Buying a touch
EntryAt the third touch the stock reverses at $51.20. A trader buys at $51.50, stop $49.80 below the line, target the prior high $55.
| Risk | $1.70 |
| Reward | $3.50 |
| Reward-to-risk | ≈ 2.1 : 1 |
The line gave the location; a reversal candle gave the trigger.
Example 3 — The break
BreakTwo weeks later the stock closes at $53.20 while the line has risen to $53.75, then continues down to $46.
| Close vs. line | Below — the trendline is broken |
| Structure | Then a lower low below the prior swing low |
The trendline broke first; the lower low confirmed the change. A break alone is a warning — structure confirms it. See Reversal.
Three touches, then a break
Trendlines vs. horizontal levels
| Aspect | Trendline | Horizontal support/resistance |
|---|---|---|
| Shape | Sloped, follows the trend | Flat, a price level |
| Drawn through | Rising lows or falling highs2 | Repeated turning points at one price |
| Changes over time | Yes — the level moves every bar | No |
| Subjectivity | Higher — depends on chosen points | Lower |
How traders use trendlines
Seeing the trend
A line makes slope and direction obvious at a glance.
Pullback entries
Touches of a confirmed line are planned buying points in uptrends.
Stop placement
Stops just beyond the line define where the trend idea fails.
Early warning
A break can be the first sign of a trend change. See Break of Structure.
Advantages and disadvantages
Advantages
- Simple and available on every chart.
- Makes trend direction and pace visible.
- Projects into the future, so entries can be planned.
Disadvantages
- Subjective: different points give different lines.
- Steep lines break often.
- Breaks can be false and quickly reversed.
- Easy to redraw after the fact to fit the chart.
Going deeper
Read as far as you need. Each level builds on the one before it.
Wicks or closes?
Beginner
Some traders draw through the extremes of wicks, others through closing prices. Either can work; choose one method and use it consistently.
Channels
Intermediate
Drawing a parallel line through the highs of an uptrend (or lows of a downtrend) creates a channel. The upper line can mark profit targets in an uptrend, the lower line entries. See Channel.
Log vs. linear scale
Advanced
On long-term charts with large price changes, a trendline drawn on a linear scale and one on a logarithmic scale can give very different readings. Long-term trend analysis is usually done on a log scale. See Linear and Logarithmic Scale.
Common mistakes
Forcing the line
If the points do not line up cleanly, there is no valid trendline.
Redrawing after every break
Moving the line to keep a trend alive hides the warning it is giving.
Trading two-touch lines as confirmed
Two points draw a line; the third confirms it.
Treating a break as a reversal
Wait for structure or other evidence before assuming the trend has turned.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Uptrend lines connect rising lows; downtrend lines connect falling highs.
- Two points draw a line; a third touch confirms it.
- Steep lines are less reliable.
- A break is a warning that needs confirmation.
- Draw consistently and never force a line to fit.
Frequently asked questions
How many points does a trendline need?
Should I draw trendlines through wicks or bodies?
Does a trendline break mean the trend is over?
Further learning
- Trend
The structure trendlines describe.
- Support and Resistance
The horizontal counterpart.
- Pullback
Where trendline entries usually happen.
- Reversal
What a trendline break may be warning about.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- Fidelity. Basic concepts of trend (opens in a new tab) Checked .
- StockCharts ChartSchool. Trend Lines (opens in a new tab) Checked .
Read more elsewhere
- Trading Metrics (our sister site): Trendlines (opens in a new tab)
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. Trading Metrics is our sister site, under the same ownership; we are not affiliated with any other publisher linked above. Last reviewed . Report an error or request a source credit.