A trendline connects two or more swing lows (in an uptrend) or swing highs (in a downtrend) to visualise the trend's direction and rate of change. Two touches establish a trendline as a hypothesis; a third touch that holds confirms traders are actively defending that slope. Two parallel trendlines form a channel, containing price between a dynamic support and resistance.
Why it matters
- —A break of a well-established trendline is one of the earliest visual signals that a trend may be weakening or reversing.
- —Channels (parallel trendlines) let traders anticipate where price might bounce within an established range.
- —Drawing too many trendlines on a chart makes everything look like support or resistance — the most useful lines are the ones tested multiple times with clear reactions.
How to read it
| Price respects the line | Trend remains intact |
| Price breaks the line | Possible trend change — watch for confirmation |
| Price oscillates within a channel | Range-bound; buy near the lower line, sell near the upper |