Drawing Trendlines Honestly

[Fairman]

Drawing Trendlines Honestly

A trendline connects swing lows in an uptrend or swing highs in a downtrend. It sounds simple, yet most trendlines on public charts are drawn to fit a story.

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Honest drawing follows rules. Use at least two clear swing points to define the line, and a third touch to confirm it. Draw it through the wicks or the bodies consistently, not whichever fits better. Do not adjust the angle after the fact to avoid a break.

Steepness matters. Very steep lines are usually unsustainable and break easily, while moderate slopes tend to last longer. After a break of a steep line, price often settles into a flatter one.

A break of a trendline is a change in behavior, not a guaranteed reversal. Price may range, retest the line from the other side, or resume the earlier trend.

Beware of the temptation to redraw. If a line breaks, the honest response is to note the break, not to draw a new line that includes the extra point. Constant redrawing means the line can never be wrong.

Log scale versus linear scale can matter on long-term charts but is less important for ordinary forex timeframes.

Practical step: draw trendlines on three charts using the three-touch rule, and record whether price respected or broke each after the third touch.

[Fairman]

A rule I use to keep myself honest: if I need to cut through candle bodies to make the line fit, it's not a valid trendline. Wicks can poke through a bit, but if I'm forcing it, I delete it and start again. Another check is to draw the line before you've decided on a trade direction. If you already want to buy, you'll find a rising trendline somewhere on the chart. Drawing it first, then asking what it suggests, keeps the bias down. And I'd only count a break as meaningful if a candle on the same timeframe closes beyond it. A wick through a 4 hour trendline on the 5 minute chart doesn't count.

[Fairman]

Another thing: redraw trendlines as new swings form, don't hang on to the old one. A trendline from three weeks ago that price broke and is now ignoring isn't telling you anything. Delete it. A good habit is to check that each trendline still connects the most recent swing points. If you have to keep adjusting the angle to make it fit, that's a sign the trend isn't clean enough to use a line on, and horizontal levels will probably serve you better. Steep trendlines break very quickly too, so lines at a gentler angle tend to hold more reliably.