Trading glossary
What is a trendline?
A trendline is a sloping line drawn through a series of rising lows in an uptrend, or falling highs in a downtrend.
A trendline turns a trend into a level that moves with time. In an uptrend it connects higher lows and acts as sloping support. In a downtrend it connects lower highs and acts as sloping resistance.
Two points draw a line, but a third touch is what makes it a trendline most traders will respect. The steeper the line, the sooner it usually breaks.
How traders use it
- Draw through the wicks or the bodies consistently, not a mix of both.
- Treat a close through the line as more meaningful than a wick through it.
- Use a break of the trendline as an early warning, and a break of market structure as the stronger signal.
Example
Gold makes higher lows at 2,300, 2,325 and 2,350 over three weeks. A line through those lows rises about 25 dollars a week. A daily close well below where that line sits today is the first warning the uptrend is losing pace.
Frequently asked questions
Should trendlines use wicks or bodies?
Either works if you are consistent. Wicks show the extremes; bodies show where sessions settled.
Does a trendline break mean the trend has reversed?
Not by itself. A trend can break its line and continue at a slower angle. A lower low in an uptrend is the clearer sign.
Related terms
Related patterns
Educational content only, not financial advice. Chart patterns describe probabilities, not certainties, and every pattern can fail. See our disclaimer.