How to Draw Trendlines and Channels: From Connecting Lows to Reading a Break
An uptrend line connects lows; a downtrend line connects highs. The third touch, channels, and how to read what follows a break.
📚 Chart Analysis, Properly From the Start · 7/33·⏱ About 6min read·Information updated 2026-09-23
📋 Key facts
Method
Connect lows for an uptrend line and highs for a downtrend line
Convention
Two points only make a line; the third touch is what gives it meaning
Channel
Fit a line parallel to the trendline to the highs or lows on the other side
Caution
A trendline break does not by itself mean the trend has reversed
What to connect
An uptrend line connects rising lows, and a downtrend line connects falling highs. An uptrend line is, in effect, the series of 'higher lows' from the trend article summed up in a single line. The thing to keep in mind is that any two points will always make a line. So the common convention is to give a line meaning only after you have drawn it through two points and price later touches it again and bounces away: a third point. The third touch is later price action confirming a line drawn in advance, so it carries more weight than two points you picked to connect.
Illustration: an uptrend line touching three lows (1, 2, 3) on one straight line, and the upper channel line drawn parallel to it through the highs in between.
Wicks or bodies
When connecting lows, there is no set answer to whether you should connect the lows (the wick tips) or the bottoms of the bodies (the lower of the open and close). Drawing through the wicks reflects every place price actually reached, but a single sharp downward wick can change the slope of the line a lot. Drawing through the bodies is less swayed by such outliers, but wicks will often poke out below the line. What matters is using the same method within one chart, and also when you look at other charts. Switching methods depending on the situation ends up being the same as picking whichever line has the shape you want.
The steeper the line, the harder it is to last
A trendline's slope is the rate of rise that price needs to stay above it. A gentle line leaves price above it even if price rests for a while, but a steep line only holds if price keeps rising at the same pace. That is why steep lines drawn during sharp rallies tend to break quickly. Sometimes a steep line breaks, a gentler one is drawn in its place, and the pattern repeats; this can be read less as the trend ending than as the rise slowing down.
Add a parallel line and you have a channel
After drawing an uptrend line, draw one more line with the same slope through the highs that formed in between, and you have a channel. The lower line roughly shows where pullbacks stopped and the upper line where rallies paused, which makes it easier to see where price sits within the channel. In a downtrend, add a line parallel to the line connecting the highs and fit it to the lows. A channel with almost no slope is the same as a trading range, a case covered separately in the article on ranging markets. When price more and more often turns down before reaching the upper channel line, some people read it as a sign that the rise is weakening, but there are also cases where price later climbs all the way to the upper line again.
On a log scale, it becomes a different line
Even when you connect the same two lows, the line changes with the chart's vertical scale. A straight line on a linear scale rises by the same amount at each step, while a straight line on a log scale rises by the same percentage. On a short chart covering a few weeks the difference is small, but on a multi-year chart where price has changed several times over, a line can look broken on only one of the two scales. That is why, for trendlines on long-term charts, you should also say which scale they were drawn on. Why this site's Bitcoin Long-Term Indicators tool uses a log chart by default, and how the two scales differ, is explained in detail in the log chart article.
The retest after a break
After a close below an uptrend line, price sometimes climbs back up, touches the underside of the line's extension and gets pushed away. This is called a pullback or a retest. It is read as a line that was acting as support now acting as resistance, the same idea as role reversal in the support and resistance article. But sometimes price moves straight away after the break without any retest, and sometimes the retest crosses back over the line and price returns above the trendline. A rule that decides only after seeing a retest pays the price of missing moves that never retest.
Illustration: after a close below the trendline, price came back up, touched the underside of the line (dotted extension) and was pushed away. A retest like this does not always happen.
A break is not a reversal
A broken trendline means price is no longer following the pace the line assumed. That does not mean it is turning into a downtrend. Price may move sideways with only the slope flattening out, or it may rest for a while and then go on in the same direction. By the standard in the trend article, to say that an uptrend has ended, the structure of highs and lows has to change, for example with a close below the most recent swing low. Trendline breaks get attention because they often appear before a change in structure, but precisely because they come first, many of them never lead to one.
Limits: same chart, different lines
Trendlines are among the most subjective tools in chart analysis. Depending on which low you start from, whether you use wicks or bodies, and which scale and timeframe you draw on, different people draw different lines on the same chart. On top of that, it is easy to find a line that fits a past chart well, so whoever drew it tends to feel the line is more powerful than it really is. Deciding your drawing rules first, writing them down and drawing only by those rules reduces this illusion. Methods that find price levels by rule, such as the Support & Resistance Finder, came about for the same reason.
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