Trendlines

A trendline break is one of the easiest signals to spot on a chart and one of the easiest to get burned by, because a wick punching through the line and a candle closing decisively below it can look almost identical in the first second or two. Knowing which one you’re looking at is most of the skill. Drawing the line that matters A trendline connects a series of swing points, higher lows in an uptrend or lower highs in a downtrend, and the more times price has respected it, the more traders are watching the same line. Two touches is barely a trendline, it’s a line drawn through two points, which is true of almost anything. Three or more clean touches is where it starts to earn attention, because that’s evidence the market itself is treating the line as a level rather than you imposing one on the chart after the fact. ...

A trendline is just a line connecting two or more swing points, but drawn carelessly it can be made to say almost anything, which is exactly why so many of them turn out to mean nothing at all. Wicks or bodies as the anchor A downtrend line connects a series of falling swing highs, the same way an uptrend line connects rising swing lows, but a single line through two points isn’t proof of anything yet, it only starts to mean something once price returns to it and reacts a third time. Two points can always be joined; a third touch that holds is what suggests other traders are watching the same line you are. ...