How to Draw Trend Lines Perfectly Every Time | Daily Price Action

How to Draw Trend Lines Perfectly Every Time

Trend lines have become widely popular as a way to identify possible support or resistance. But one question still lingers among Forex traders – how to 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.

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.

Exclusive Bonus: Download the trend lines PDF cheat sheet to learn helpful tips and techniques on how to draw these levels and use them to find setups.

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.

gbpusd daily trend line support

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.

audnzd forex trend line resistance level

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 discuss 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.

how to draw a forex trend line during an uptrend

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.

trading a forex trend line at 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.

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.

gbpchf trend line during rally

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.

cadchf weekly trend line resistance

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.

Trend Lines and Overlap

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

forex trend line

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.

Never Try to 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 Potential 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.

gbpchf trend line break and retest

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.

usdjpy former trend line resistance becomes support

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

Now I've Got a Question For You...

Are you ready to begin using these techniques in your trading?

Then you definitely want to download the free Forex trend lines PDF that I just put together.

It contains the four keys to drawing these levels accurately. I’ve also included examples so you can see exactly how I use trend lines in my trading.

Click the link below and enter your email to download the cheat sheet.

Trend lines optin

  • hiep says:

    thank you @@@@@@@@@

    • You’re very welcome.

      Justin

      • Andrew Thorne says:

        Thank you very much. I am new at this and losing money constantly, even as we speak. Hope this helps.

  • asim kazmi says:

    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.

      • Lazarus says:

        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

  • esam says:

    very clear and contains some good points worth noticing .Thank you keep it up

  • Peter says:

    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.

  • JimR says:

    thank you so much for selflessly sharing your knowledge. I am growing as a trader with the regular technical analysis you are sending.

  • Mike says:

    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.

  • Sammy says:

    Thank you very much, sir!

  • sohail says:

    it was helpfull i have a question what is the best timeframe to draw the trend lines ?

  • Moeletsi Mathabathe says:

    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.

  • Very clear concept and specific

  • Francesco says:

    useful clear simple. Thank you

  • adesoji says:

    very educative.thank u sir

  • sudharshan says:

    Good article. Keep posting ……………. Thanks 🙂

  • Dipak Modi says:

    Knowledgeable & self explanatory.

  • Goitse says:

    Great article. On point. Tx always a pleasure reading your blog.

  • Agga says:

    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.

  • RichardG says:

    Nice read justin. Very clear and will give more edge on traders if done correctly. Thanks for the share..richard

  • Moeletsi says:

    Thanks again Justin, I’d also like to know if is it okey to draw these trend lines on the 4 hourly chart.

  • Jaron Lines says:

    Fantastic article! With your great understanding of the market you could be building a huge following with passive residual income through iMarketsLive.

  • Dan says:

    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 ?

  • Mrs M says:

    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

  • Eddie says:

    Thanks Justin for the informative post. So clear and precise.

  • Ignis Cattus says:

    well, now I know what should I do 😀
    thanks mate

  • Q says:

    This was so helpful. How often do these breakouts occur in the market across all major pairs?

  • Craig says:

    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?

  • Roy Peters says:

    Excellent article. After trading for only 3 months. Things are starting to sink in now. I have a clean chart with no indicators.

  • Olalekan says:

    Nice information on trend line usefulness

  • Lawal Babatunde says:

    It was insightful.

  • Teresa says:

    I got the answer I was looking for. Thank you.

  • mlungelwa ncwane says:

    excellent

  • Ahmad Baron says:

    i am rich now.. good job draw trendline thank you sir

  • fatokun babatunde says:

    Nice write up.

  • John says:

    Wow what agreat strategy bro.

  • Herbert says:

    thank you sir

  • Oscar says:

    Thank you Justin.

  • Ntsako says:

    Thank you for this trendline lesson, very well written and illustrated, cleared my confusions.

  • Arhan Arya says:

    Clearly explained.
    Thank you Justin.

    🍀💚🍀

  • Np says:

    +

  • Diksha says:

    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.

  • jennifer says:

    The write-up was really helpful.Tnk

  • Neo says:

    Thanks for the information

  • Neo says:

    Thank you

  • thandeka says:

    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

  • Antohi Dan says:

    thank you for your lesson

  • antonio says:

    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

  • Habib Khalid says:

    Thank you very much..
    this is very helpful..

  • Morrthy Chelliah says:

    Great info for a beginner. Tq.

  • Jauhar Mahadkar says:

    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.

  • Govan says:

    now i know how to draw trendline thank you sir.

  • Rodg says:

    Thank you Justin. I found it very useful and this gave me a better understanding how to draw the trendlines and horizontal lines.

  • Henry Chijiago says:

    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…

  • Olasoji Ayeni says:

    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.

  • Elesco Mponzi says:

    Thank you sir very valuable information to me about drawing trend lines!

  • desiree king says:

    Was very helpful, Thank You

  • Davie Ngush says:

    Justin you the genius, you always point out something i can never think of.

  • Dave says:

    THANK YOU

  • ik says:

    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 🙂

  • Nathi says:

    Thank you for the lesson sir now i understand how to use trend line.

  • TOBIKO says:

    GREAT TEACHING.THANK YOU

  • you mom says:

    can you rub my pussy?

  • Steven Ijumba says:

    Yap good

  • Mariano says:

    It’s really helpful, thank you much appreciated!

  • kerlinah says:

    thank you very much, now I know and understand how to spot and draw trend lines

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