Trendline

A straight line drawn along a series of swing highs or swing lows that defines the slope of a trend and acts as diagonal support or resistance until price breaks it.

A trendline connects two or more pivot points to project the angle of a trend. An uptrend line runs beneath rising swing lows and acts as diagonal support; a downtrend line runs above falling swing highs as diagonal resistance. Automated trendline tools test many pivot pairs, keep the lines touched most often without being violated, and rank them by touch count. A valid line needs at least two anchor points, and each additional touch that holds increases its significance.

As long as price respects the line, the trend is intact, and the slope tells you the trend's pace. A break of the trendline — especially a close beyond it on rising volume — warns that the trend may be pausing or reversing. The angle matters: an unsustainably steep line tends to break and revert to a shallower one, while a shallow, much-tested line is more durable. Like horizontal levels, a broken trendline can switch roles from support to resistance.

Trendlines are useful but the most subjective of the common tools — small changes in which pivots you anchor produce very different lines, and it is easy to draw one that fits the past while carrying no predictive value. Automated, touch-scored trendlines reduce that bias and are more trustworthy than eyeballed ones. Even so, diagonal levels are generally less reliable than horizontal support/resistance and volume nodes, because far fewer participants watch the exact same line. They work best for defining trend slope and for break signals confirmed by volume or a structure change, not as precise reversal points.

This definition is for informational and educational purposes only. Nothing on Finance Compass constitutes financial, investment, or trading advice. Always conduct your own research and consult a qualified professional before making financial decisions.