Trendlines &
Channels
Diagonal support and resistance. The roadmap that shows you where price is heading and when the direction changes.
First — Why This Matters
Riding an Escalator
Stand on an escalator going up. You keep rising without effort — that's a trend. Now imagine the escalator stops. You're still standing, but no longer rising. A trendline tells you if the escalator is still running.
When price is trending up, it follows a diagonal path — like an escalator. A trendline drawn along the lows shows you the angle and speed. When price breaks below that line? The escalator just stopped. Time to step off.
Real scenario: EUR/USD has been climbing for 3 weeks following a clean trendline. You buy on each pullback to the trendline and ride the bounce. On the fourth touch, price breaks through and closes below. You exit immediately — saving yourself from a 150-pip drop that followed.
01 — The Concept
What Are Trendlines?
Support and resistance are horizontal. But markets don't always move sideways — they trend. A trendline is diagonal support or resistance that follows the direction of the trend.
In an uptrend, connect the rising swing lows — that line is your trendline. As long as price respects it, the trend is alive. When it breaks? That's your early warning signal that the trend may be over.
Ascending Trendline (Going Up)
When price is trending upward, each dip is higher than the last — like climbing stairs. Draw a line along those dips and you get an ascending trendline. As long as price stays above this line, the uptrend is alive. Think of it as a rising floor that keeps lifting you higher.
Descending Trendline (Going Down)
The opposite — each rally is weaker than the last, like a ball bouncing lower each time. Draw a line along those weakening rallies and you get a descending trendline. It's a falling ceiling that keeps pushing price lower.
Price Channel (The Corridor)
Imagine a bowling lane — price bounces between the gutters. Draw one line along the lows and another along the highs. That's a channel. Price ping-pongs between the two lines. Buy when it hits the bottom line, sell when it hits the top. Simple and effective.
02 — See It Live
Toggle Between Types
Switch between uptrend, downtrend, and channel views. Notice how the trendlines automatically connect the swing points (coloured dots).
Ascending Trendline
Drawn along swing lows (green dots). Each low is higher than the last — that's an uptrend. The line acts as diagonal support. As long as price stays above it, buyers are in control.
03 — The Rules
6 Rules for Valid Trendlines
Not every diagonal line is a trendline. Follow these rules to draw ones that actually work.
Rule 1: Minimum 2 Touches
EssentialA trendline needs at least 2 swing points to be valid. One point is nothing. Two points make a line. Three or more? That's a confirmed trendline.
Rule 2: Use the Thick Part of Candles
ImportantCandles have thin lines (wicks) and thick coloured parts (bodies). Use the thick parts to draw your line. The thin wicks are just momentary spikes — the body is where price actually decided to settle. It's like using someone's average height, not the height of their hair.
Rule 3: If You Have to Squint, It's Not Real
CriticalA good trendline is OBVIOUS. If you're twisting the line through candles trying to make it fit, it's not valid. It's like constellation spotting — if someone has to explain for 5 minutes why those stars look like a bear, it's probably not a bear.
Rule 4: More Touches = Stronger
KeyA trendline with 5 touches is far more significant than one with 2. Each additional touch confirms that traders are respecting the diagonal level.
Rule 5: Too Steep = Too Fragile
PracticalA gentle slope is sustainable — like walking up a hill. A near-vertical slope is unsustainable — like trying to run up a cliff. If your trendline looks almost vertical, it WILL break soon. The best trends move at a comfortable, steady angle.
Rule 6: Break = Signal
ActionableWhen price breaks through a well-established trendline, it's a significant event. An uptrend line break signals potential reversal to downside. Always have a plan.
04 — Channels
Trading Inside the Channel
Channels give you a complete trading framework: where to buy, where to sell, and when to exit.
Buy at Lower Bound
When price touches the lower channel line, look for bullish candle patterns. Enter long with a stop just below the channel.
Sell at Upper Bound
When price reaches the upper channel line, take profit or open shorts. The upper line is resistance — expect rejection.
Channel Break = Something Big
When price finally escapes the channel, it often makes a big move — like a compressed spring releasing. The bigger the channel (wider and longer), the bigger the breakout move tends to be. This is where significant profits are made.
The Middle Line Matters Too
Draw an invisible line through the centre of the channel. Price often pauses or bounces here — it's like the centre line of a road. Not as powerful as the channel edges, but useful for fine-tuning your entries and exits.
05 — Break or Bounce?
Can You Tell the Difference?
Look at each chart and decide: did the trendline hold or break? This is one of the most important real-time decisions you'll make as a trader.
Did the trendline break or hold?
06 — Assessment
Trendlines & Channels Quiz
7 questions. Prove you can draw, validate, and trade trendlines.
Question 1 of 7
An ascending trendline is drawn along:
Question 2 of 7
How many touch points does a trendline need to be valid?
Question 3 of 7
What is a price channel?
Question 4 of 7
A steep trendline (nearly vertical) is:
Question 5 of 7
When drawing trendlines, you should connect:
Question 6 of 7
Price breaks below a well-established ascending trendline. This signals:
Question 7 of 7
In an ascending channel, where would you look to BUY?
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