Trends, trendlines & channels

Levels tell you where; the trend tells you which way. Getting on the right side of the trend is the single biggest, oldest edge there is — so before any trade, you answer one question: which direction is this market actually going?

Trend is just structure

Strip away the noise and price is doing one of three things. An uptrend makes higher highs and higher lows. A downtrend makes lower highs and lower lows. A range goes sideways between a floor and a ceiling. That’s it — read the highs and lows and the trend names itself.

Drawing a trendline

In an uptrend, connect the rising lows with a line; in a downtrend, connect the falling highs. Two points draw it, a third touch confirms it. That line becomes dynamic support (or resistance) — a moving level where price tends to react.

Channels: the other rail

Draw a parallel line on the opposite side and you have a channel. Price often rides between the two rails, which gives you a map: buy near the lower rail in an uptrend, take profit near the upper one. The trendline gives you the cheap entry; the channel gives you the target.

Trade with it — until it breaks

The edge is boring and it works: in an uptrend, favour buying dips to the trendline rather than shorting. The trend stays your friend right up until structure breaks — the first lower low in an uptrend (or higher high in a downtrend) is the market’s warning that the tide may be turning. Respect it.