Trend lines are the most intuitive tool for judging market direction.
How to draw them? In an uptrend, connect two or more swing lows with an upward-sloping line; in a downtrend, connect two or more swing highs with a downward-sloping line. Whenever price touches the line it bounces and does not break through— the more often this happens, the more credible the line becomes.
Three key points:
1. Two touchpoints are the minimum requirement; three or more is more reliable. The more touchpoints and the longer the time period, the more trustworthy the trend line.
2. A trend line is for reference, not a guarantee. After a break, what looks like a false breakdown may reverse— the key is the closing price and the strength of the breakout.
3. After a trend line is broken effectively to the downside, it often flips to become a resistance level (support turns into resistance). That transition zone is often crucial.
The same applies to the crypto market: the way you draw trend lines for BTC and ETH is exactly the same. But because crypto is volatile and false breakouts are common, it’s recommended to use trend lines from the daily or weekly timeframe as reference, and don’t treat lines from a one-minute chart as gospel.
Trend lines are not laws of the market—they are tools to test it. After you draw the line, the focus is not on the line itself, but on how price reacts when it reaches it.
Preview for next time: Trend strength— how to tell whether a trend is “still far from being run out”?
How to draw them? In an uptrend, connect two or more swing lows with an upward-sloping line; in a downtrend, connect two or more swing highs with a downward-sloping line. Whenever price touches the line it bounces and does not break through— the more often this happens, the more credible the line becomes.
Three key points:
1. Two touchpoints are the minimum requirement; three or more is more reliable. The more touchpoints and the longer the time period, the more trustworthy the trend line.
2. A trend line is for reference, not a guarantee. After a break, what looks like a false breakdown may reverse— the key is the closing price and the strength of the breakout.
3. After a trend line is broken effectively to the downside, it often flips to become a resistance level (support turns into resistance). That transition zone is often crucial.
The same applies to the crypto market: the way you draw trend lines for BTC and ETH is exactly the same. But because crypto is volatile and false breakouts are common, it’s recommended to use trend lines from the daily or weekly timeframe as reference, and don’t treat lines from a one-minute chart as gospel.
Trend lines are not laws of the market—they are tools to test it. After you draw the line, the focus is not on the line itself, but on how price reacts when it reaches it.
Preview for next time: Trend strength— how to tell whether a trend is “still far from being run out”?