Trendline¶
A trendline is a straight line drawn through two or more significant price pivot points on a chart, extended forward to project the direction of a trend. An uptrend line runs beneath rising swing lows and acts as dynamic support; a downtrend line runs above falling swing highs and acts as dynamic resistance. A line is considered valid once price has touched it at least three times without a decisive close through it.
HOW IT WORKS¶
Trendlines are constructed manually, not by formula. Identify the two most significant swing lows (uptrend) or swing highs (downtrend), connect them with a straight line that does not cut through any candle bodies between the anchors, and extend the line forward. The line gains significance only after a confirmed third touch. Slope is calculated as rise over run — (P2 − P1) / (T2 − T1) — where P is price and T is the bar index. Lines in the 30–45 degree range tend to be the most durable; steeper lines break more frequently. On long-term charts, a logarithmic price scale is preferred because the resulting line represents a constant percentage rate of change rather than a constant dollar amount. A decisive close beyond the line signals that the prevailing trend has weakened or reversed, prompting traders to redraw rather than assume an immediate trend change in the opposite direction.
IN TAPEBOARD¶
Draw trendlines directly on any chart in the Tapeboard terminal by anchoring two pivot points; the line extends automatically and updates as new bars form. Use the paper trading simulator to test trendline-based entries — buying pullbacks to a rising line with a stop just below it — and exits triggered by a close through a respected line, all without committing capital. Trendlines drawn in Tapeboard can be combined with RSI overlays and volume profile to add confirmation before acting on a touch or break.