Technical & Chart AnalysisTrend Line
Trendline
A straight line drawn along successive swing lows or highs to visualise the slope and boundary of a trend.
What Trendline means
A trendline is a straight line drawn across successive swing points to make the slope and boundary of a trend visible. In an uptrend it connects rising lows and sits beneath price; in a downtrend it joins falling highs and sits above price. Two points define the line and a third touch is normally required before it is considered validated. Analysts differ on whether to anchor the line to candle wicks or to closing prices; wicks capture the full trading range, while closes filter out brief liquidity spikes and often produce a cleaner line.
Trendlines are used as dynamic support and resistance, as a trigger where a decisive close through the line warns that the trend's slope has failed, and as one boundary of a price channel when a parallel copy is attached to the opposite swings. The obvious limitation is subjectivity. Small changes in the chosen anchor points, or a switch between linear and logarithmic scaling, move the line materially, and a broken trendline signals only that the current slope has ended, not that the trend has reversed.
Worked example
A trader connects EUR/USD swing lows at 1.0705 and 1.0780; extended forward, the line sits near 1.0845, and a bounce there with a stop at 1.0810 gives a defined risk of about 35 pips.
Related terms
- TrendA sustained directional bias in price, conventionally defined by a sequence of higher highs and higher lows, or the reverse.
- SupportA price area where buying interest has previously been strong enough to halt or reverse a decline.
- ResistanceA price area where selling interest has previously been strong enough to stop or reverse an advance.
- Price ChannelTwo parallel lines enclosing price action, marking the upper and lower boundaries of a trend or range.
- BreakoutA move of price decisively through an established support, resistance or consolidation boundary.
Frequently asked questions
What does Trendline mean in forex trading?
A straight line drawn along successive swing lows or highs to visualise the slope and boundary of a trend.
How does Trendline work in practice?
Trendlines are used as dynamic support and resistance, as a trigger where a decisive close through the line warns that the trend's slope has failed, and as one boundary of a price channel when a parallel copy is attached to the opposite swings. The obvious limitation is subjectivity. Small changes in the chosen anchor points, or a switch between linear and logarithmic scaling, move the line materially, and a broken trendline signals only that the current slope has ended, not that the trend has reversed.
What is an example of Trendline?
A trader connects EUR/USD swing lows at 1.0705 and 1.0780; extended forward, the line sits near 1.0845, and a bounce there with a stop at 1.0810 gives a defined risk of about 35 pips.
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