Trendlines: How to Draw Them and When to Trust Them

The trendline is the most subjective instrument in technical analysis: two points can be joined almost any way you like. That is precisely why the rules for drawing one matter more than the fact that a line exists on the chart.

Which points to use

In an uptrend the line is built through rising lows, in a downtrend through falling highs. Two points are needed to draw it and a third touch to believe it: while there are only two touches, the line describes the past rather than structure. The points must be significant extremes, not incidental bends within a move.

Bodies or wicks

There is no single correct answer, but there is a practical approach: build through bodies and treat wicks as acceptable overshoot. Bodies show where participants agreed to close the day; wicks show where price merely visited. A line drawn through wicks makes every poke look like a break; drawn through bodies the picture is calmer and closer to the substance.

What a break of the line means

Not a reversal of the trend. Breaking a trendline means only a change in the angle of movement: the trend may continue more gently, turn into a range, or genuinely reverse. A reversal is confirmed by structure — a break in the sequence of extremes — not by crossing a drawn line. Confusing the two is the most common error in working with trendlines.

When to redraw

When price has closed beyond the line twice and continued at a new angle, the old line no longer describes the market. Redrawing the line after every move is not allowed: that turns it into a justification for a decision already taken. A useful rule is to fix the line in advance and not touch it while a trade is open.

We deliberately publish no measurement for this figure. Its marking cannot be formalised unambiguously, and any detection algorithm would reflect our arbitrary thresholds rather than a property of the market. Where the definition is strict — as with the inside bar or engulfing — we test the pattern on data and publish the result. Here it is more honest to say there is nothing to test.

This material is educational and is not individual investment advice. Trading forex carries the risk of losing capital.