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.

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.

-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.