Trendlines: What They Are, How to Draw Them and How to Trade a Break

A trendline is a straight line drawn on a price chart through two or more swing points and extended to the right. In an uptrend it joins rising swing lows and runs under price; in a downtrend it joins falling swing highs and runs above price. As long as price stays on its side of the line, the trend is intact; a close through the line is the first sign that it may be over. Trendlines are a tool of support and resistance: an up trendline is a rising support, a down trendline a falling resistance.

We have not measured single trendline breaks on our bench: the lines on this page are drawn by a fixed rule on real prices to show how the tool reads, not to prove that it works.

How to draw a trendline

1. Find the swing points. In a downtrend, the highs; in an uptrend, the lows. To avoid choosing them by eye, use a rule: here, a swing high is a bar whose high is above the highs of the 10 bars before it and the 10 bars after it. That rule has a delay: a swing point is only known 10 bars after it forms, so the line through it can only be drawn from that day on.
2. Join two of them. Two points always make a line; that alone proves nothing.
3. Wait for a third touch. A line that price comes back to and respects a third time has held once more after being drawn; two points alone have not been tested. ChartSchool states the rule this way: “It takes two points to draw a trend line, and the third one confirms the validity.”
4. Choose wicks or bodies, and keep to it. Lines through the highs and lows of the candles and lines through the bodies give different breaks. Neither is right; mixing them on the same chart is wrong.
5. Check the scale. On a linear chart, the line falls by the same amount of dollars every day; on a logarithmic chart, by the same percentage. Over months, the two lines drift far apart. ChartSchool notes that highs and lows “appear to line up better for trend lines when prices are displayed using a semi-log scale,” especially for long-term lines or after a large change in price.

A real example: the Bitcoin down trendline of 2025 to 2026

On daily Bitcoin, two swing highs by the 10-bar rule stand out at the start of the decline: 126,199.63 on October 6, 2025 and 97,924.49 on January 14, 2026. Here is the line drawn through those two highs, on both scales. The rule that picks them: the highest swing high of the window, then the later swing high that gives the flattest line, so that no later swing high is above it. The January 14 high was confirmed by the rule on January 24, 2026, so this line could be drawn long before price reached it.

• Linear scale: the line falls by 282.75 dollars a day. On April 10, 2026, the high of 73,434 came within 1% of the line, at 73,607.87. On April 11 and 12, the highs went above the line but the closes stayed below. The first close above came on April 13, at 74,417.99 against a line at 72,759.62.
• Logarithmic scale: the line falls by 0.2533% a day. On April 17, 18 and 21, the highs went above the line but the closes stayed below. The first close above came on April 22, at 78,178.23 against a line at 76,370.90.

On the log chart, the line falls by a smaller amount at low prices, so it sat higher, and the break came nine days after the linear one, at a price about 5% higher. The same two points, read on two scales, gave two different signals; our guide to linear and log price scales explains why. Note also that this line was never touched a third time before it broke: by the rule of step 3, it was never confirmed.

In these examples, wicks crossed the line before a close did. A rule based on closes gives fewer and later signals than one based on any touch, and even a close can be reversed the next day.

Trading a trendline

• The bounce. Buy near an up trendline, or sell near a down trendline, with a stop on the other side. The line gives a clear point where the idea is wrong.
• The break. Act on a close through the line, or after a retest of the broken line from the other side. The trendline breakout strategy covers entries, stops and targets, and our page on the breakout covers false breaks.
• The trend filter. Take only trades in the direction of the line, and stand aside once it breaks.

Patterns built from trendlines

Two trendlines on the same chart make a pattern: converging lines make a triangle or a wedge, parallel lines a channel. Unlike a single trendline, which we have not measured, these patterns are detected by rule and measured on our bench (see our methodology).

Trendline or regression line?

A trading trendline goes through chosen swing points and leaves price on one side. A regression line, like the linear trendline of a spreadsheet chart, is fitted through all the points, with price on both sides. Microsoft describes Excel's linear trendline as the least squares fit of a line, y = mx + b, where m is the slope and b the intercept. It answers a different question: the average direction of the data, not the level where a trend would break.

Moving averages give a curved version of the same idea: the moving average indicator and the Gann HiLo Activator both follow the trend under or above price without drawing anything by hand. More tools are listed with the trend indicators, and the Trend Intensity Index measures how strong a trend is.