Trend lines have become widely popular as a way to identify possible support or resistance. But one question still lingers among all traders – how should I draw trend lines? In this lesson, we’ll discuss what trend lines are as well as how to draw them.

I’m also going to share a secret way that I like to use trend lines to spot potential tops and bottoms in a market, so be sure to read the lesson in its entirety.

Let’s get started!

What Are Trend Lines?

As the name implies, trend lines are levels used in technical analysis that can be drawn along a trend to represent either support or resistance, depending on the direction of the trend.

If you catch the trend, it is easy to earn the prot from the investment. You buy in uptrend and sell in downtrend. Actually however, as markets do not generally move straight but move randomly depending on the daily news and demand and supply. Market moves are characterized by a series of zigzags. These zigzags resemble a series of successive waves with fairly obvious peaks and troughs.

You have to find out a broader perspective on the direction of the trend by having got rid of the trend and unnecessary movements. One method to gain such a perspective is to draw a straight line that could suggest a certain trend and thus is called Trendline. The oldest description of trendline was found in Japan in the book about the stock trade (Kabushiki Baibai Youketsu or Essence of Stock Trade) written by Kokichi Inoue in 1912. He pointed out that you may draw a straight line by connecting either troughs or peaks and expand it to merge with another extended line of the current price. This is apparently a drawing of the trend line itself, but to our regret, Inoue did not give any name to this drawing method and its usage. The name Trendline appeared in the book Technical Analysis of Stock Trends written by Robert Edwards and John McGee in 1948. This book is called the Bible of Technical Analysis and revised many times with new knowledge.

Uptrend line and Downtrend line

There are two trend lines. One is the uptrend line analyzing the uptrend and another is the downtrend line analyzing the downtrend. The uptrend line is sometimes called the support line and the downtrend line is called the resistance line. The uptrend line is the extended line drawn from the low milestone price to then the next low milestone price when the market is considered in the uptrend.

The downtrend line is the extended line drawn from the high milestone price to the next high milestone price when the market is considered in the downtrend. When the actual stock price crosses under the uptrend line or crosses over the downtrend line, either case is considered the signal of the reversal point of the trend price.

Let’s take a look at a trend line that was drawn during an uptrend.

Notice how in the daily chart above, the market touched off of trend line support several times over an extended period of time.This trend line represented an area of support where traders can begin to look for buying opportunities

Now let’s take a look at a trend line that was drawn during a downtrend.

Similar to the uptrend in the first chart, this downtrend touched off of our trend line several times over an extended period of time.The difference is that the trend line above represents a downtrend, during which time it acts as resistance, giving traders an opportunity to look for selling opportunities

How to Draw Trend Lines Correctly?

To draw trend lines correctly, follow these steps:

1. Identify the Trend

• Uptrend: Higher highs and higher lows.
• Downtrend: Lower highs and lower lows.
• Sideways (Range): Price moves within a horizontal range.

2. Choose the Right Points

• Uptrend: Draw the trend line below the price, connecting at least two higher lows.
• Downtrend: Draw the trend line above the price, connecting at least two lower highs.
• The more times the trend line is tested, the stronger it is.

3. Extend the Line

• Extend the line into the future to predict potential support or resistance levels.

4. Validate the Trend Line

• The trend line should not be forced to fit the price.
• It should be respected by the price at multiple points.

How to draw multiple trend lines in a common trend

Below is the monthly chart of Nikkei Average from 1982 to 1993. This shows the turning point on which the historical high price of Yen38,915 started to move downwards in 1989 in the so-called bubble market.
Line 1 drawn from A to B and extended
Line 2 drawn from C to D and extended
Line 3 drawn from D to E and extended

All lines are upward line. You can see the change of the pitch from Line 2 to Line 3 getting faster. The point where the actual stock price crossed under Line 3 was the turning point of the reversal of uptrend which clearly shows that the 8 -year long rising market came to an end.

3 Keys to Drawing Trend Lines Effectively

There are three very important keys to drawing effective trend lines.

1. The higher time frames will always produce the most reliable trend lines, so start there and work your way down
2. Most trend lines you come across will have some overlap from the high or low of a candle, but what’s important is getting the most touches possible without cutting through the body of a candle
3. Never try to force a trend line to fit – if it doesn’t fit the chart then it isn’t valid and is therefore not worth having on your chart

Use Higher Time Frames for Drawing Trend Lines

Using higher time frames when drawing trend lines is a key strategy for identifying stronger and more reliable trends. Here’s why and how you should do it:

Why Use Higher Time Frames?

1. Filters Out Market Noise: Lower time frames (e.g., 5-minute or 15-minute charts) have more price fluctuations and false breakouts. Higher time frames (daily, weekly) give a clearer picture of the main trend.
2. Stronger Support & Resistance Levels: Trend lines drawn on higher time frames act as major levels, respected by traders across different time frames.
3. Better Decision-Making: Trading based on a trend line from a higher time frame helps you align with the dominant market direction, increasing the probability of successful trades.
4. Avoid False Breakouts: Price may temporarily break a trend line on a lower time frame but still respect the trend on a higher time frame.

How to Use Higher Time Frames for Trend Lines?

1. Start with a Higher Time Frame (Daily or Weekly)
   • Identify the major trend by connecting key highs and lows.
   • Draw trend lines that align with the price structure.
2. Zoom into Lower Time Frames for Entry
   • Once you have a trend line on a higher time frame, switch to a lower time frame (e.g., 1-hour, 4-hour) to find better trade entries.
   • Look for price action signals (e.g., candlestick patterns, breakouts, retests).
3. Confirm with Multiple Time Frames
   • A trend line drawn on a weekly chart should still hold weight on the daily chart.
   • If the price respects the trend line across multiple time frames, it’s a strong level.

Example

• If a trend line is drawn on the daily chart and price touches it multiple times, it becomes a strong support or resistance zone.
• On the 4-hour or 1-hour chart, you can look for confirmations (e.g., reversal patterns or bounces) to enter trades in the direction of the main trend.

Trend Lines and Candlesticks – Wick or Candle Body?

When drawing trend lines on a chart, traders often debate whether to use the candle body or the wick (shadow). Both methods have their own logic and applications, and choosing the right one depends on market conditions and trading style.

1. Using the Wick for Trend Lines

Pros:

✅ Captures Extreme Price Movements: Since wicks represent the highest and lowest points of price action, using them ensures that all price action is accounted for.
✅ More Precise in Volatile Markets: In markets with strong volatility, using wicks can help identify key turning points.
✅ Avoids Missing Key Levels: If price touches a level with its wick multiple times, it indicates that traders respect that price zone.

Cons:

❌ More False Breakouts: Since wicks can be caused by temporary price spikes, relying on them too much may lead to drawing trend lines that price frequently breaks.
❌ Less Reliable in Stable Markets: When the market moves smoothly, wicks may not represent the most significant levels.

2. Using the Candle Body for Trend Lines

Pros:

✅ Represents Closing Price Consensus: The candle body shows where the majority of traders agreed on price, making it more reliable in many cases.
✅ Fewer False Breakouts: Since the body filters out extreme wicks, it reduces the chance of getting faked out by short-term volatility.
✅ Better for Trend-Following Traders: If you are looking for long-term trends, drawing trend lines based on bodies gives a clearer, smoother structure.

Cons:

❌ Ignores Important Rejections: If a strong wick rejects a key level but the body does not touch it, you might miss an important trend signal.
❌ Can Miss Key Support/Resistance Touches: If price respects a level with only wicks, a body-based trend line might not capture the full picture.

3. Which One Should You Use?

• In volatile markets → Use wicks to capture price extremes.
• In trending markets → Use bodies to avoid noise and focus on the true trend.
• For confirmation → Combine both:
  • Draw the initial trend line with wicks to capture extremes.
  • Adjust to candle bodies if the price consistently respects the body level.

Pro Tip:

Both methods have their place in technical analysis. The key is to test both approaches on different time frames and markets, then choose the one that fits your strategy best. Many professional traders use a hybrid approach, adjusting their trend lines based on context.

If a wick touches a trend line but the body closes above/below, treat it as a potential fake-out and wait for confirmation before making a trading decision.

Never Force a Trend Line to Fit

One of the biggest mistakes traders make when drawing trend lines is forcing the line to fit the price action just to confirm a bias. This can lead to poor analysis, false signals, and ultimately, bad trading decisions.

What Does It Mean to Force a Trend Line?

Forcing a trend line means:

• Bending or adjusting the trend line unnaturally to touch more points.
• Ignoring clear price action structure just to make the line look “valid.”
• Drawing lines through candles or forcing them through areas where the market structure clearly doesn’t support a trend.

Why Is It Dangerous?

❗ False Confirmation: You may convince yourself that a trend exists when it doesn’t.
❗ Missed Key Levels: A forced trend line might hide the real support/resistance levels.
❗ Emotional Trading: It usually comes from the desire to “see” a trade where none exists.
❗ Breakouts Become Meaningless: If your trend line isn’t based on valid structure, breakouts above/below it will not provide reliable signals.

How to Avoid Forcing Trend Lines

✅ Stick to Clear Rules: A valid trend line must connect at least two significant swing highs (downtrend) or two significant swing lows (uptrend) — ideally three.
✅ Let the Market Shape the Line: Draw the line after the structure is clear, not before.
✅ Don’t Chase Price: If price action no longer respects a trend line, remove or adjust it.
✅ Zoom Out and Look at the Bigger Picture: If you find yourself struggling to draw a line, you may be looking too closely. Higher time frames provide more clarity.
✅ Stay Objective: Detach your emotions and trade what you see, not what you want to see.

Example

Suppose you’re in an uptrend and the market makes a sudden sharp dip. Forcing the trend line to still touch that dip and continue the trend can give you a false sense of security.
Instead, wait for the next higher low to form naturally and then redraw your trend line.

How to Use Trend Lines to Market Reversals

Trend lines are powerful tools for identifying potential market reversals. When used correctly, they can help traders recognize when a trend is losing momentum and a reversal might be on the horizon.

1. Identify a Strong Trend Line

Before a reversal can occur, a valid trend line must be established. A trend line should:

• Connect at least two to three swing highs (downtrend) or swing lows (uptrend).
• Be respected multiple times—the more touches, the stronger the trend line.

If price has consistently followed the trend line, its break could signal a potential reversal.

2. Watch for Trend Line Breaks

A market reversal often begins with a trend line break. This happens when:
✅ Price closes decisively below an uptrend line or above a downtrend line.
✅ The break occurs with strong momentum or high volume.
✅ The price retests the broken trend line and fails to reclaim it.

🔹 False Breakouts: Not all trend line breaks lead to reversals. A false breakout occurs when price breaks the trend line but quickly returns above/below it. Wait for confirmation before acting.

3. Look for Additional Confirmation Signals

A trend line break alone isn’t enough—combine it with other reversal signals:

• Candlestick Patterns: Reversal patterns like double tops/bottoms, head and shoulders, engulfing candles, and pin bars add confirmation.
• Divergence on Indicators: If RSI or MACD shows divergence while price is still trending, it suggests weakening momentum.
• Support/Resistance Zones: If price breaks a trend line near a major support/resistance area, it strengthens the reversal case.

4. Spotting Trend Reversals Early vs. Late

• Aggressive Traders: Enter immediately after the trend line break, aiming to catch the start of a new trend.
• Conservative Traders: Wait for a retest of the broken trend line and enter when price fails to reclaim the trend.

5. Set Stop Loss & Targets

• Stop Loss: Place it just beyond the last swing high/low before the trend line break.
• Profit Targets: Use previous support/resistance levels, Fibonacci retracement levels, or measured moves based on the trend’s length.

Final Thoughts

Trend lines provide a visual guide for spotting reversals, but they should never be used in isolation. Combine them with other technical indicators, price action, and confirmation signals to improve accuracy.

By mastering trend line breaks and using additional confluence factors, you can identify high-probability reversal trades and avoid false signals.

Frequently Asked Questions

What is a trend line?

A trend line is a diagonal support or resistance level on a price chart. It’s often used to identify support during an uptrend or resistance during a downtrend.

How do you draw trend lines?

Start with a prominent high or low on a higher time frame such as the daily. From there, look to see if you can connect a trend line with the subsequent lows (for an uptrend) or highs (for a downtrend).

Is it okay if a trend line cuts through a candlestick?

It’s okay if a trend line cuts through a small part of the upper or lower wick on a candlestick. However, as a general rule, a trend line should not cut through the body of a candlestick.