Trading term
What is Trendline?
A trendline is a straight line drawn along a series of swing lows (in an uptrend) or swing highs (in a downtrend) to map the trend's direction and slope. While price keeps respecting the line the trend is intact; a decisive break of it warns the trend may be turning.
You draw a trendline by connecting at least two — ideally three — significant turning points. In an uptrend you connect the rising swing lows, giving a line that slopes up and acts as support beneath price. In a downtrend you connect the falling swing highs, giving a line that slopes down and acts as resistance above price. The more times price touches the line and bounces, the more validated and closely watched it becomes.
A trendline does two jobs. It's a visual read on the trend's health — a steep line is fragile, a shallow one more sustainable — and it's a dynamic level traders lean on: buying a pullback to a rising trendline, or treating a clean break as a sign the trend's character has changed. Two touches make a hypothesis; the third touch confirms the line.
Connect three rising swing lows and you have the uptrend's trendline. Each touch that bounces validates it; a decisive close below would warn the trend is turning.
For example
A stock bottoms at $40, $44 and $49 on three separate pullbacks. A line through those three rising lows is the uptrend's trendline — and when price later closes below it, the uptrend is called into question.
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Explore Premium →Why it matters to you
A trendline turns a vague sense of 'it's going up' into a concrete, drawable level you can act on and be proven wrong at. That's its power: it gives you both a place to buy (the bounce) and an exact line where the trend thesis fails (the break) — the two things every trend trade needs.
⚠ Don't force the line
It's tempting to draw a trendline that touches the most points by ignoring the ones that don't fit, or by cherry-picking intraday wicks over the bodies. A line you had to bend the rules to draw isn't a real level. If it takes creative fitting, the trend structure probably isn't there.