Trend Line
A straight line drawn across a series of price highs or lows on a chart, used to visualize the direction and rate of a trend and to spot potential support or resistance.
A trend line is a straight line drawn across a series of at least two, and ideally more, comparable price points on a chart — connecting successive higher lows during an uptrend, or successive lower highs during a downtrend — to visualize the trend's approximate direction and rate of change over time. The more times price touches and respects a trend line without breaking through it, the more significant technical analysts generally consider that trend line to be.
A trend line functions similarly to support and resistance (see Kaavon's "Support and Resistance" glossary definition), but as a sloped, moving level rather than a fixed horizontal one, and it forms the basic building block underlying many other chart patterns, including a triangle (see Kaavon's "Triangle Pattern" glossary definition), wedge, flag, and channel. A decisive break of a well-established trend line is commonly treated as an early signal that the existing trend may be weakening or reversing, though as with any single signal, most technical analysts look for additional confirmation before acting on a trend line break alone.
Examples
- An uptrend's rising trend line connects a series of successively higher lows, serving as a moving support level that price tends to bounce off of while the trend remains intact.
- A trend line that price has touched and respected many times without breaking is generally considered more significant than one drawn from only two touch points.