What Is Trendline?
A trendline is a straight line connecting two or more swing lows (ascending trendline) or swing highs (descending trendline) on a price chart. It serves as a dynamic support or resistance level that moves with time. A valid trendline needs at least two touch points, with three or more touches making it stronger.
How Trendline Works
The angle of the trendline indicates the trend's pace. Steep trendlines (above 45 degrees) suggest unsustainable momentum that often leads to sharp corrections. Moderate trendlines (30-45 degrees) suggest healthy, sustainable trends. Flat trendlines essentially define horizontal support or resistance. When a trendline is broken, the role inverts — former support becomes resistance.
Why It Matters for Traders
Trendline breaks are among the most watched signals in crypto. A daily trendline that held for months breaking on high volume signals a significant shift in market structure. However, false breakdowns (or breakouts) are common — wait for a close beyond the trendline rather than reacting to intra-candle wicks. Combine trendline breaks with volume and momentum confirmation for higher-probability entries.
