what do trendlines tell you 
the trendline is among the most important tools used by technical analysts instead of looking at past business performance or other fundamentals technical analysts look for trends in price action a trendline helps technical analysts determine the current direction in market prices technical analysts believe the trend is your friend and identifying this trend is the first step in the process of making a good trade to create a trendline an analyst must have at least two points on a price chart some analysts like to use different time frames such as one minute or five minutes others look at daily charts or weekly charts some analysts put aside time altogether choosing to view trends based on tick intervals rather than intervals of time what makes trendlines so universal in usage and appeal is they can be used to help identify trends regardless of the time period time frame or interval used if company a is trading at 35 and moves to 40 in two days and 45 in three days the analyst has three points to plot on a chart starting at 35 then moving to 40 and then moving to 45 if the analyst draws a line between all three price points they have an upward trend the trendline drawn has a positive slope and is therefore telling the analyst to buy in the direction of the trend if company a s price goes from 35 to 25 however the trendline has a negative slope and the analyst should sell in the direction of the trend example using a trendlinetrendlines are relatively easy to use a trader simply has to chart the price data normally using open close high and low below is data for the russell 2000 in a candlestick chart with the trendline applied to three session lows over a two month period the trendline shows the uptrend in the russell 2000 and can be thought of as support when entering a position in this case a trader may choose to enter a long position near the trendline and then extend it into the future if the price action breaches the trendline on the downside the trader can use that as a signal to close the position this allows the trader to exit when the trend they are following starts to weaken trendlines are of course a product of the time period in the example above a trader doesn t need to redraw the trendline very often on a time scale of minutes however trendlines and trades may need to be readjusted frequently the difference between trendlines and channelsmore than one trendline can be applied to a chart traders often use a trendline connecting highs for a period as well as another to connect lows in order to create channels a channel adds a visual representation of both support and resistance for the time period being analyzed similar to a single trendline traders are looking for a spike or a breakout to take the price action out of the channel they may use that breach as an exit point or an entry point depending on how they are setting up their trade limitations of a trendlinetrendlines have limitations shared by all charting tools in that they have to be readjusted as more price data comes in a trendline will sometimes last for a long time but eventually the price action will deviate enough that it needs to be updated moreover traders often choose different data points to connect for example some traders will use the lowest lows while others may only use the lowest closing prices for a period last trendlines applied on smaller timeframes can be volume sensitive a trendline formed on low volume may easily be broken as volume picks up throughout a session 