Trendline
Updated on March 19, 2023
A trendline is a straight line that is drawn on a chart to connect two or more price points and is used to identify a current trend in the market. There are two types of trendlines: uptrend lines, which connect two or more low points, and downtrend lines, which connect two or more high points.
What are an uptrend line and a downtrend line?
An uptrend line, also known as a support line, is drawn along the lows of an uptrend and is used to identify a bullish trend. This line can be used to determine potential buying levels, as the price is likely to find support at this level and bounce back up.
A downtrend line, also known as a resistance line, is drawn along the highs of a downtrend and is used to identify the bearish trend. This line can be used to determine potential selling levels, as the price is likely to encounter resistance at this level and fall back down.
Is a trendline a definitive indicator of a trend?
It is important to note that a trendline alone is not a definitive indicator, and it is best used in conjunction with other technical analysis tools, such as chart patterns, indicators, and support and resistance levels, to confirm the trend. Additionally, the more times a trendline is tested and holds, the more significant it becomes as a level of support or resistance.
