A trendline is a straight line connecting consecutive swing lows in an uptrend (or swing highs in a downtrend), used to describe the trend’s pace. It is an overlay drawn on price — price paths are facts; trendlines are subjective rulers placed on top.
How it works
Two points define the line; a third respected touch is the first evidence it is being watched. Anchoring convention — wicks or closes — must stay consistent, and the slope is read after drawing, never designed first.
A trendline break means the described pace has changed, nothing more. Trend structure ends only when the horizontal swing point behind it fails.
Why it matters
Trendlines are secondary tools around horizontal levels: horizontal swing points mark where orders actually clustered, while diagonals only describe rhythm.
Steep lines describe fast, rarely durable phases. Screen angle is also a scaling artifact — slopes are comparable only within one chart at one zoom.
A simple market example
An uptrend connects lows at 21.50 and 23.80. The third touch arrives a month later and holds — now the line is information. When price closes below it but holds the prior low at 23.00, the pace slowed; the trend is not yet invalidated.
Common mistakes
Redrawing the line to a deeper point after every break, so the chart always shows an unbroken line. Rewritten lines measure hope, not rhythm.
Treating a diagonal break as an automatic sell signal, without checking the horizontal structure.
Frequently asked questions
Should trendlines use wicks or closes?
Either — the requirement is consistency. Wicks record real extremes; closes filter spikes. Switching between them to improve the line destroys its meaning.
How many touches does a trendline need?
Two draw it, three validate it. Touches spread over time carry more evidence than touches in one dense cluster.
What does a trendline break actually mean?
A change of pace — faster to slower, or the start of a transition. It becomes a reversal signal only when combined with a failed horizontal swing point.
Educational content only. Definitions describe common market usage and may vary by jurisdiction, instrument, or institution.