Trendline
A diagonal line drawn on a chart connecting data points to visualize the general direction of price movement.
Plain-English Meaning
A trendline connects the "dots" of high or low prices over time. An upward trendline connects rising low points, while a downward trendline connects falling high points.
Why It Matters
Trendlines visually map out the current market direction and help traders spot when a trend is continuing or beginning to reverse (breakout). They act as angled support and resistance levels.
Simple Example
If a crypto asset makes steadily higher lows over a week, you can draw a line connecting those lows. This upward trendline shows that buyers are stepping in earlier and earlier.
This educational example uses selected assumptions for reference calculation purposes. Real conditions may vary by broker, exchange, or instrument.
Beginner Mistake
Forcing a trendline to fit by ignoring the actual price action. If you have to bend the rules to make the line touch, the trendline is probably not valid or respected by the market.
Note: Trendlines are subjective chart tools. Different users may draw them differently based on timeframe and chart interpretation.