01Drawing it honestly
- 1In an uptrend, connect higher lows. In a downtrend, connect lower highs.
- 2Two points draw a line; a third touch confirms that others are watching it.
- 3Use wicks or bodies consistently — never bend the rules to make a line fit.
- 4Steep lines break quickly; shallow lines describe durable trends.
02What a break does — and does not — mean
A trendline break tells you the pace of the trend has changed. It does not by itself mean the trend has reversed: many breaks lead to sideways ranges or a shallower trend. Confirmation comes from structure — a lower high followed by a break of the last higher low.
Pro insightUse lines for location, structure for direction
Professionals use trendlines to locate where pullbacks should hold and where liquidity (stop orders) sits just beyond the line. They use swing structure to decide direction.
TipTrendline liquidity
Because so many traders place stops just under a well-known trendline, price often wicks through it before reversing. That pool of stops is a target — you will meet this idea again in the Liquidity lessons.
Key takeaways
- Uptrend lines connect higher lows; downtrend lines connect lower highs.
- Two points draw it, the third confirms it.
- A break shows momentum is changing; structure confirms reversal.
- Obvious trendlines collect stops beneath them.
Common mistakes
- Forcing a line through candles to make it fit
- Calling a reversal on the first break
- Drawing lines so steep they cannot last
Complete “Support & Resistance” to unlock this challenge.