An uptrend is defined by:

Higher highs and higher lows. An uptrend requires consistently higher highs and higher lows.

A trend line in an uptrend connects:

Swing lows. In an uptrend, the trend line is drawn along the ascending swing lows.

Trends & Trend Lines

Identifying and trading market direction

A trend is the general direction of price over time. Understanding trends is crucial because trading with the trend dramatically increases your probability of success. "The trend is your friend" is one of the oldest and most important sayings in trading.

Uptrend: Price makes higher highs (HH) and higher lows (HL). Each peak is higher than the last, and each dip bottoms at a higher level.

Downtrend: Price makes lower highs (LH) and lower lows (LL). Each peak is lower, and each dip goes deeper.

Sideways/Range: Price bounces between support and resistance without making new highs or lows.

Trend lines are drawn by connecting at least 2-3 swing lows (in an uptrend) or swing highs (in a downtrend). They act as dynamic support or resistance.

Pro tip: A trend is only broken when price makes a structure shift (break of a key swing point).

Pro tip: Most money is made during strong trends — avoid fighting them.

Common mistake: Trying to pick tops and bottoms (counter-trend trading). Better: Trade with the trend until there is clear evidence of a reversal.

Common mistake: Drawing trend lines through candle bodies. Better: Connect wick extremes (swing lows/highs) for accurate trend lines.

Key takeaways

Uptrend = Higher Highs + Higher Lows
Downtrend = Lower Highs + Lower Lows
Trade WITH the trend for highest probability
Trend lines connect swing points as dynamic S/R

Quiz

An uptrend is defined by: Answer: Higher highs and higher lows. An uptrend requires consistently higher highs and higher lows.
A trend line in an uptrend connects: Answer: Swing lows. In an uptrend, the trend line is drawn along the ascending swing lows.

Educational content, not financial advice.