To draw a trendline, connect two or more swing points in the direction of the trend: swing lows in an uptrend, swing highs in a downtrend. Learning how to draw trendlines is mostly learning consistency, because the same chart gives different lines unless you fix your anchor points, your wick-or-body rule and your definition of a break before you start.
Quick answer: how do you draw a trendline?
1) Find a clear trend on your main timeframe. 2) In an uptrend, connect the two most obvious swing lows; in a downtrend, the two most obvious swing highs. 3) Use the same point type every time, wicks or bodies. 4) Treat the line as confirmed after a third touch, and judge breaks on candle closes.
Swing-to-swing rules for drawing a trendline
A trendline only means something if it joins real turning points. A swing low is a low with higher lows on either side; our guide on how to identify market structure with highs, lows and breaks explains how we decide which swings are significant.
- Start on the higher timeframe. Daily and 4-hour swings are fewer and clearer than 5-minute ones.
- Pick the anchor. In an uptrend, start from the swing low where the trend began.
- Pick the second point. Use the next significant higher low, not any small dip.
- Extend the line to the right. That is where it becomes useful, as an area to watch.
- Do not cut through candles. If the line slices through several bodies between your points, the points are wrong.
How many touches make a trendline valid?
Two points draw a line; they do not prove it. Most traders, us included, treat a third touch that holds as the moment the line becomes meaningful. The catch is that by the third touch much of the trend may already be behind you.
- Two touches: a hypothesis. We watch it but do not trade off it alone.
- Three touches: a working line, worth combining with other evidence.
- Four or more: widely watched, and so a likely place for stops to sit nearby.
A line that keeps getting touched also tells you price keeps coming back to it, which can mean the trend is tiring. More touches is not automatically better.
Wicks or bodies: pick one and keep it
Our guide on how to read candlestick charts for beginners covers the difference between a wick and a body. Both methods have defenders, and neither is “correct”.
| Factor | Wicks | Bodies |
|---|---|---|
| What it captures | The full extreme price reached | Where buyers and sellers settled |
| Best on | Clean charts with small wicks | Noisy charts with long wicks |
| Main risk | One spike skews the line | Ignores real rejections |
| Break judged by | A close beyond the line | A close beyond the line |
We default to wicks and switch to bodies only on charts where long wicks keep distorting the line. The one rule that matters: never anchor on a wick and take the second point from a body.
Trend channels
A channel adds a parallel line through the swings on the other side: through the swing highs in an uptrend. It gives a rough picture of how far price tends to travel in each leg. Short channels drawn around a pause after a sharp move are how traders mark out the bull flag and pennant continuation patterns.
We use the far side of a channel as a place to be careful, not as a target. When price stops reaching it, the trend’s momentum is often slowing.
Broken trendlines vs breaks of structure
This is where most beginners go wrong. A broken trendline tells you the pace of the trend has changed; it does not tell you the trend is over. Price can break a steep line and simply carry on at a gentler angle.
What we treat as a real change
In an uptrend, the structure changes when a candle closes below the last significant higher low. That is a change of character, and it matters more than any diagonal line. Our guide on how to spot the start of a new trend with price action picks up from there.
When a break is tradable
If a trendline break and a break of structure arrive together, and price then retests the broken area from the other side, that is far stronger evidence. The rules for that entry are in our breakout and retest strategy explained.
The subjectivity problem
Hand a chart to five traders and you may get five trendlines. Different anchors, different timeframes, wicks or bodies, linear or logarithmic scale: each choice moves the line. That is why we treat diagonal lines as secondary to horizontal levels, which our guide on which key levels count and how to rank them covers.
Research avoids the problem by fitting the line mathematically. A study presented at Oxford’s Oxford-Man Institute found that, on 12 futures markets, a linear trend fitted to the price path made a better trading signal than the simple sign of past returns, with lower turnover. That is a fitted line, not a hand-drawn one, but the lesson carries over: fixed rules beat feel.
So we write our drawing rules down and never redraw a line to make it fit. Redrawing is fair only when a new significant swing forms.
Worked example: a trendline as confluence
Example, using hypothetical figures on a £5,000 account where we risk 1% per trade, or £50. A hypothetical currency pair is in a 4-hour uptrend. A rising trendline joins swing lows at 1.2500 and 1.2560, and a third touch would come near 1.2620, where an old resistance zone of 1.2615 to 1.2625 has turned into support.
- Entry: a bullish close at 1.2632 after the touch.
- Stop: 1.2595, below the zone and the touch low, so 37 pips of risk.
- Size: £50 ÷ 37 pips = about £1.35 per pip on a spread bet.
- Target: the previous high at 1.2720, 88 pips away, about 2.4 times the risk.
The trendline alone would not justify the trade; the horizontal zone does the heavy lifting. Our guide on where to place a stop loss with price action covers the buffer. Spread bets are leveraged, so a gap through the stop can cost more than the planned £50.
Common mistakes when drawing trendlines
- Forcing a line. If you need to cut through candles to make it fit, there is no line.
- Drawing too steep. Lines after a vertical move break quickly and mean little.
- Mixing wicks and bodies. Choose one point type per line.
- Redrawing after every break. That turns a rule into hindsight.
- Reading a line break as a trend change. Check the swing structure first.
- Drawing on the lowest timeframe first. Our top-down chart analysis guide starts higher.
Frequently asked questions
Should trendlines be drawn on wicks or bodies?
Either works if you are consistent. We start with wicks and move to bodies only when long wicks keep distorting the line.
Can a trendline have only two touches?
You can draw one with two, but we treat it as a hypothesis until a third touch holds. Until then, it should not be the main reason for a trade.
Does a broken trendline mean the trend has reversed?
No. It shows the pace has changed. We only treat the trend as changed when price closes beyond the last significant swing low or high.
Should I use a log or linear scale?
On short timeframes the difference is small. On long-term charts with large percentage moves, the two scales put the line in different places, so pick one and stick to it.
Next steps
The complete beginner’s guide to price action trading shows how lines, levels and structure fit together into one method.
Discovering the beginning of new trends is one of the topics in our price action trading course, and the basics section is free to start.
This article is for education only and is not financial advice. Trading leveraged products such as CFDs and spread bets carries a high risk of losing money.
