Trend lines have become widely popular as a way to identify possible support or resistance.
But one question still lingers among Forex 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!
BONUS: Download a free PDF cheat sheet that shows you how to draw trend lines perfectly every time. Plus, get my daily Forex newsletter with exclusive Forex trade setups and strategies.
Table of Contents
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.
Think of them as the diagonal equivalent of horizontal support and resistance.
These trend lines can help us to identify potential areas of increased supply and demand, which can cause the market to move down or up respectively.
Let’s take a look at a trend line that was drawn during an uptrend.
Notice how in the GBPUSD 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 GBPUSD uptrend in the first chart, this AUDNZD 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
Now that we have a good understanding of what trend lines are, let’s go over how to draw them.
The very first thing to know about drawing trend lines is that you need at least two points in the market to start a trend line.
Once the second swing high or low has been identified, you can draw your trend line.
Here is an example of the first two swing lows that have been identified.
Notice in the chart above, we have two main points at which we can start to draw our trend line. Once this level has been established, we can start to look for bullish price action to join the rally.
Sure enough, just a few weeks later a bullish pin bar emerged at trend line support.
The bullish pin bar above provided a signal to traders that the trend line was likely to hold. This gave traders an opportunity to buy at support to join the rally.
3 Keys to Drawing Trend Lines Effectively
There are three very important keys to drawing effective trend lines.
- The higher time frames will always produce the most reliable trend lines, so start there and work your way down
- 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
- 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
Let’s take a look at each of these in greater detail.
1) Use the Higher Time Frames for Drawing Trend Lines
Just about everything I do in the Forex market begins on the daily time frame and drawing trend lines is no exception.
One reason I prefer the daily time frame for drawing trend lines, besides the fact that I do most of my trading from this time frame, is that it represents an extended period of time.
This brings me to a very important rule regarding trend lines.
The longer a trend line is respected, the more important it becomes.
A trend line that extends over two years will always be considered more important than a level that only extends the course of two weeks.
Here is a great example of a trend line that was drawn from the daily time frame.
In the GBPCHF daily chart above, after the second swing low was made we could have drawn our trend line.
Notice how the market formed a bullish pin bar at the third touch from this trend line.
This is a perfect example of the type of buying opportunity a trader would look for using trend line support.
Another higher time frame that I like to use to draw trend lines is the weekly chart. This time frame is great for identifying potential targets during uptrends or downtrends on the daily time frame.
Here is a great example of how a weekly trend line on CADCHF can be used to identify a potential target.
The chart above shows a weekly trend line that can be extremely useful to identify a potential target for CADCHF. The daily time frame is in an uptrend at the moment, so this weekly trend line would give us a great starting place to look for a potential profit target.
2) Trend Lines and Candlesticks – Wick or Candle Body?
One of the most common questions when it comes to drawing trend lines is, should they be drawn from the high/low of a candle or from the open/close of the candle.
The answer to this question depends on the trend line.
It’s very rare to find a trend line that lines up perfectly with highs or lows.
Similarly, it’s rare to find a trend line that lines up perfectly with the open or close of each candle.
Let’s take a look at an example
Notice how the trend line above does not perfectly line up with the highs of each candle, nor does it line up perfectly with the open or close of each candle.
This doesn’t mean that the trend line is invalid. What’s important here is that the weekly chart above never closed above this level.
The most important part of any trend line is to get the most touches without the level cutting off part of a candlestick.
If you find that a trend line cuts through the body of a candlestick, then the trend line is likely not valid.
3) Never Force a Trend Line to Fit
This is perhaps the most common pitfall Forex traders make when drawing trend lines.
We call this “curve fitting” and it happens when a technical trader is so convinced that a level should exit, that the trader begins to try to make the level fit the price action on the chart.
This brings me to the most important part about drawing trend lines, or any support or resistance level for that matter.
The best trend lines are the most obvious ones. So if a trend line doesn’t fit well, it’s probably best to move on to another pattern.
How to Use Trend Lines to Spot Market Reversals
As promised, I’m going to show you a way that I like to use trend lines to determine the strength of a trend.
Moreover, this method can help you spot potential reversal points in the market.
At this point in the lesson, you know that a trend line can be used to identify potential buying or selling opportunities.
But this only works as long as the market continues to respect the trend line as support or resistance. So what happens when the market no longer respects the level?
This is where you have a chance to trade a market as it makes a turn from a major swing high or low.
Below is an example of a market that broke trend line support and then retested that same trend line as new resistance.
We can see in the GBPCHF daily chart above, that the pair had respected a trend line for some time.
However once the market broke trend line support, it quickly retested former support as new resistance.
This retest gave traders the opportunity to sell the pair, which would have resulted in a substantial gain over the next several days as the market sold off.
One thing to note about using trend lines in this way is that it works best when you have a really clean trend line with three or more touches.
The more obvious the trend line is, the better this strategy will work.
We can also use this strategy to identify a bullish reversal.
Notice how shortly after breaking trend line resistance, the market came back to retest the trend line as new support and formed a bullish pin bar in the process.
This gave price action traders an opportunity to buy just before the market rallied for 800 pips.
This is a great way to use trend lines to spot potential reversals in the market. It is without a doubt one of the best ways to catch a big move as a market changes direction.
Summary
I hope this lesson has given you a better understanding of how to draw trend lines and how they can be used in the Forex market.
We’ve covered a lot in this lesson, so let’s recap some of the important points.
- Think of trend lines as the diagonal equivalent to horizontal support and resistance levels
- Trend lines can help traders identify buying and selling opportunities that occur within a strong trend
- The higher time frames will always produce the most reliable trend lines, so start there and work your way down
- 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
- 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
- A break and retest of a trend line that had three of more touches can often mean a reversal in the market and a potential buying or selling opportunity
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.
One Last Thing…
I created a free trend lines PDF cheat sheet that you can use to quickly learn the most important information from this blog post.
The cheat sheet contains helpful tips and tricks for drawing trend lines with examples.
Click below to download the free cheat sheet:
thank you @@@@@@@@@
You’re very welcome.
Justin
Thank you very much. I am new at this and losing money constantly, even as we speak. Hope this helps.
sir ,it is great column….
thank you
Thank you for this lesson I have been using trendlie/support/resistance without much understanding this is the best explanation by far. Thank you
That’s great to hear, Sifiso. Trend lines can be incredibly powerful when you know what to look for.
Let me know if you have any questions.
Thanks for confirming that to us , now I know where to spot and either buy or place a sell but what is the target ratio.PLZ elaborate
Thank you.What time frame do i need to start drawing trendlines as an intraday trader?
very clear and contains some good points worth noticing .Thank you keep it up
Glad to hear it, Esam. Thanks for stopping by.
Thanks for this insightful article I have always seen horizontal levels coincide with trend line leaving me confused what a coincidence …it’s not until today have learnt trend line is diagonal representation of horizontal levels.
Thanks again .
You’re welcome, Peter. Although, diagonal levels and horizontal levels are separate things. They do sometimes coincide, but each should stand on its own.
thank you so much for selflessly sharing your knowledge. I am growing as a trader with the regular technical analysis you are sending.
Pleased to hear that, Jim. Feel free to reach out with any questions.
Great explanation Justin, struggled with trendlines myself in exactly the way you described ie forcing them to fit sometimes leading to poor trade entries etc, Thankyou for pointing this out.
Mike
Mike, glad you found it helpful. Forcing levels to fit is one of the most common errors I see. If a level is worth keeping an eye on, it should fall into place with almost no effort.
Thank you very much, sir!
You’re welcome, Sammy.
it was helpfull i have a question what is the best timeframe to draw the trend lines ?
Sohail, here is a lesson on time frames that should help: https://dailypriceaction.com/free-forex-trading-lessons/what-time-frame-is-best-for-trading-forex
Hi Justine, thanks for the brilliant article. This is genius. I would like to know is it safe to just use trend lines and not horizontal likes.
Moeletsi, glad you enjoyed the post. It takes a lot of practice, but trend lines can be extremely helpful, particularly when determining the strength of a trend. This lesson will help with that: https://dailypriceaction.com/free-forex-trading-lessons/3-powerful-techniques-determine-trend-strength
thanks alot for the clear article on trendlines fam.did you say you analyse using the bigger timeframes then you place trades in the smaller timeframes based on the information from big timeframes?
You’re welcome. No, I only use the daily time frame in most cases.
Very clear concept and specific
Pleased to hear that, Monir. Thanks for the feedback.
useful clear simple. Thank you
You’re welcome.
very educative.thank u sir
My pleasure.
Good article. Keep posting ……………. Thanks 🙂
Thanks, Sudharshan. Will do.
Knowledgeable & self explanatory.
Great article. On point. Tx always a pleasure reading your blog.
Thanks. Pleased to hear that.
Some of trend line broken are false because the price go up or down just a few candles.
How can we know the brake out is true or false?
The best way, in my opinion, is to wait for confirming price action such as a pin bar.
Nice read justin. Very clear and will give more edge on traders if done correctly. Thanks for the share..richard
You’re welcome, Richard.
Thanks again Justin, I’d also like to know if is it okey to draw these trend lines on the 4 hourly chart.
You can if it makes sense to do so.
Fantastic article! With your great understanding of the market you could be building a huge following with passive residual income through iMarketsLive.
Glad you enjoyed it.
I have been trading this way on D1 and W1 graphs so far its been profitable but there is so few trading opertunities can i drop down to 4hour graphs or is that a bad idea ?
I’m trading binary and I’m using short time frame ,1 min chart …I will try to use longer chart as well thank u Justin
Thanks Justin for the informative post. So clear and precise.
well, now I know what should I do 😀
thanks mate
This was so helpful. How often do these breakouts occur in the market across all major pairs?
Hello Justin, you say one needs to practice, are you actually telling me that with practice you can actually get better at drawing trendlines up?
Excellent article. After trading for only 3 months. Things are starting to sink in now. I have a clean chart with no indicators.
Nice information on trend line usefulness
It was insightful.
I got the answer I was looking for. Thank you.
excellent
i am rich now.. good job draw trendline thank you sir
Nice write up.
Wow what agreat strategy bro.
thank you sir
Thank you Justin.
Thank you for this trendline lesson, very well written and illustrated, cleared my confusions.
Clearly explained.
Thank you Justin.
🍀💚🍀
+
Justin thank you for this information; I have a question: having a small pot, I like to trade intra-day. Should I plot my trendline(s) on a higher time frame e.g. hourly/4 hourly/daily and trade to these on the smaller time frames or should I draw them on the smaller ones and trade to these?
Comments welcome.
The write-up was really helpful.Tnk
Thanks for the information
Thank you
thank you so much for the information, am still new and trying to learn how to master trading and using tools properly. I learnt a lot today
thank you for your lesson
Ciao Justin,
grazie ora mi è molto piu chiaro come interpretare la tendenza
Grazie!!!! Il mio scopo di fare il trader sta per essere riabilitato!!!
Un abbraccio
Thank you very much..
this is very helpful..
Great info for a beginner. Tq.
It is a excellent idea has been given to those who are very new in trading, trading is not so easy to do anytime we have to keep patience for that moment which we are eagerly waiting for buy or sell as per trend lines given opportunity, specially the pin bar. Thanks a lot Brother Justin Benette.
now i know how to draw trendline thank you sir.
Thank you Justin. I found it very useful and this gave me a better understanding how to draw the trendlines and horizontal lines.
Hmmm!!! I love this. Your article on trend line helped me a lot on the chanages I encountered when drawing and identity trend line.
God bless…
This lesson is great, precise and straight to the point with so simple English that really enhance assimilation and understanding.
I’ve never understood trend line technique as much as I do now after read your wonderful lesson.
Please keep it up sir.
Thank you sir very valuable information to me about drawing trend lines!
Was very helpful, Thank You
Justin you the genius, you always point out something i can never think of.
THANK YOU
im wondering why if i do trendline on the daily chart ,let’s say downtrend ,the wick or body did not touch the trendline yet,but when i see on weekly,its already touched,which one is correct to see ?thanks in advance master 🙂
Thank you for the lesson sir now i understand how to use trend line.
GREAT TEACHING.THANK YOU
can you rub my pussy?
Yap good
It’s really helpful, thank you much appreciated!
thank you very much, now I know and understand how to spot and draw trend lines
very nice and easy I now start to make profit after this lesson thank u very much
You’re welcome. Always glad to help.
tnx alot
You’re welcome.
Now I get it. This is very helpful. started practicing right away. thanks
It’s my pleasure. Let me know if you have questions.
Hi =)
If you go to the picture the “first point” and the “secound point” i have some difficulty to see how many points
a trendline has in my charts. in your picture for me it can be three points as we have three bars that touch the
trendline. so it needs space between the points to be a point? what do you say to use zigzag in
the chart as the standard settings to locate the points? thanks
You just need two supports or resistances to draw on. If it’s not up to two then it’s void.
Wow this is soo clear..thank you
Yep excellent clear article. Trends never as straightforward as portrayed but this piece really highlights that and strategies to draw accurate trendlines on your charts.
Thanks for the feedback, Patrick. Glad you enjoyed it.
thanks very helpful…
thanks
thanks for sharing
I FEEL CONFIDENT AND READY TO TRADE AFTER I WENT THROUGH THIS LESSON
realy good
Thank you. Glad it helped.
Amazing lesson.
Thank you very much.
Hoping to join your community soon.
You’re welcome, Raphael. Happy to help.
I hope to see you on the membership site soon!
very informative & helpful
Oh my this just opened my eyes bright, and sir I just gain a strategy from you thanks for sharing with us this information 🙏.
That depends on the trade you want to follow, weekly charts(trade) is different from daily chart(trade).
You simply good and awesome. I said thank you. Pls I would love to download this book you talk about. How do I go bout it? kindly message me on my email.
I am narrating a technical book on Price Charts .
How would I verbalize this line of copy please? “An aggressive trader could have bought the Double Bottom Pullback reversal in GS above the Bar 5 ii in Figure 1.11, but there was not yet a trendline break in the small bear down from Bar 4.” …Its the double i (ii) that I do not know how to verbalize.
Absolutely brilliant explanation,
Very good described by you the trend lines and it’s behaviour in market,hatsoff sir and thankyou
It’s really helpful
This really helped me understand the market thank you so much Mr Justin
Very great lesson