The basis for drawing trend lines onto charts is probably one of the most basic to do and master, yet it is one of the more powerful and reliable indicators used to determine a change in trend. Trend lines can be applied to many different indicators but we will use closing price data. When viewing most charts a pattern of the price formation is usually visible to the naked eye. This pattern is called a trend and these trends have three distinct patterns.
Up Trend: Prices increasing
Downtrend: Prices decreasing
Holding or Flat Line: Prices stagnant or small trading range. ?A trend line is basically a line drawn joining consecutive lows or highs in a trend pattern
An up trend with trend line drawn in? Draw a line connecting the lowest points on a chart in an up trend.
A down trend with trend line drawn in ?Draw a line connecting the highest points on a chart in a down trend.
Holding pattern with both lines drawn in ?Draw both highs and lows for a holding pattern