A1 Trading Company

Ticker tape by TradingView

Unlock Exclusive Guides as a VIP Member! 

Use Code READER for 10% Off

LEARN MORE

The Ultimate Guide to Trendline Trading

Big Idea: Trendlines are another commonly used tool to help traders spot wedges or channels in price action. Trendlines are straight lines that connect one point to another to help investors see where channels form and whether price is nearing a breakout or if it is stuck in consolidation. The way some traders draw these lines can vary from the way others do, so it is mostly subjective which can cause discrepancies in price action. Some traders may even argue that trendlines do not work solely for that reason; but like support and resistance levels, trendlines are used for investors to consider certain areas or zones on where to place their trades.

What to Look for When Trading With Trendlines

What traders are mainly looking for is a general area to long or short certain pairs/stocks/crypto based on the overall trend. That way, you can get a near-perfect entry and considerable probability of success in whatever direction you are trading in. For example, if you were bullish on the SPX500, but see that it is in an uptrend, you might want to buy when price comes down to or around its trendline.
Trendline Trading

EURNZD Example

Trendline Trading
Here is another example of trendlines in action. You can see that this pair has been trading sideways for some time creating its own highs and lows where each crest and trough sit at around the same level each time. Price finds support at the same price as the last low, and it retraces at the same levels of resistance. These sideways channels are usually areas of consolidation before big moves. And at some point, price will eventually break out, but for the time being, the trend will stay relatively strong.

SPX500 Example

trendline trading
This is a chart of SPX500 on the 1D chart. You can see that a blue, supportive trendline connects all the dips in price on the uptrend. In this case, price is moving in an uptrend, so price comes down only to reach new highs. The red line shows areas of tops where traders take a break by holding, closing or even shorting at those levels so they can buy in again. An upward trend that looks like a staircase such as this example is a healthy move whereas a parabolic jump in price is not. The importance of noticing this trend will help you see when a trade looks safer than a sudden, dramatic jump.

Key Takeaways from Trendline Trading


-A trendline is a line that connects two or more points on chart to show the overall direction of price action as well as the relative boundaries in which price trades.

-There can be an uptrend, downtrend or sideways trend.

-Trendlines are subjective, so there is no such thing as a perfect way to draw them.

-Trendlines are ways for traders to spot direction and trade in that direction.

Videos on Trendline Trading

How to Trade Forex using Trendlines | Trendline Trading Strategy 📈

FREE Price Action Course: Mastering Trendlines for Pullbacks & Breakouts

Trendlines Don't Work When Trading Forex? The Truth!

What's Next?

Keep learning about technical analysis!
  • SUPPORT & RESISTANCE

    Learn how to use the number 1 most commonly used price action tool!
    BEGIN LESSON

    MOVING AVERAGES

    Learn all about moving averages, and how to trade with them!
    BEGIN LESSON

    RELATIVE STRENGTH INDEX

    Learn all RSI, and how to trade with it!
    BEGIN LESSON
  • ENGULFING & PINBAR CANDLESTICK PATTERN

    Learn all about engulfing & pinbar candlestick patterns, how to spot them, and how to trade them!
    BEGIN LESSON

    HAMMER CANDLESTICK PATTERN

    Learn all about hammer candlestick patterns, how to spot them, and how to trade them!
    BEGIN LESSON

    CANDLESTICK PATTERN BASICS

    Learn all about candlestick patterns, how to spot them, and how to trade them!
    BEGIN LESSON
  • REVERAL TRADING

    Learn how to spot markets reversing early, and get involved!
    BEGIN LESSON

    HEAD & SHOULDERS PATTERN

    Learn how to use this popular reversal method in your trading
    BEGIN LESSON

    BUILDING A TECHNICAL BIAS

    How to use technicals to assist your trading entries
    BEGIN LESSON

Done With Technical Analysis?

Unlock exclusive guides by becoming a VIP member! Get 10% off with code 'READER'
  • Risk on vs Risk Off Guide

    Understand the difference between risk on and risk off trading
    BEGIN LESSON

    Building a trading plan

    Find out how to build a winning trading plan!
    BEGIN LESSON

    FUndamental Analysis

    Download the Fundamental Analysis Guide!
    UNLOCK
  • Sentiment Analysis

    Download the Technical Analysis Guide!
    UNLOCK

    Trading Psychology

    Download the Trading Psychology Guide!
    UNLOCK

    Risk management

    Learn about Risk to Reward & Drawdowns
    UNLOCK
  • Strategy Development

    Backtesting & Forward Testing
    UNLOCK

    Nick's strategy

    Download Nick's Strategy
    UNLOCK
Home
Edgefinder
VIP
Menu
homepencillockflagpaperclipfile-emptybookbookmarksmartphonelaptopmenuhighlight linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram