The Power of Trend Lines

Trend lines are an excellent tool, but they don't need to be complicated. Essentially, you're just connecting two points on a chart. The confusion usually comes from wondering which trend line is the "right" one. But here’s the truth: the one you draw and understand is the right one. Trend lines are a way to help you organize your thinking and identify the direction of the market.

When trading, your first job is to determine the direction in which the price is moving. Price is always going somewhere, and it can’t get there without crossing a trend line at some point on the timeframe you’re trading. Once you’ve identified the direction, draw the most obvious trend line. These lines act as decision points or magnets—price will either move toward them or bounce away.

Remember, trend lines vary depending on the timeframe. For example, if I think the price is moving up from support, I might start drawing my trend line on a lower timeframe, like a 699-tick chart. But then, I’ll watch how it behaves on a larger timeframe, like the 5-minute chart. As price approaches a 5-minute trend line, it will usually test it. If it breaks, I might stay in the trade. If it rejects the line, I aim to move to break even (BE). Being at BE is the gold standard—because once you're at BE, the market can’t hurt you anymore.

As you move up to higher timeframes like the 60-minute chart, trend lines get more complex, giving price more room to move around. Still, if the price breaks a 60-minute trend line, it shifts the probability in favor of a trend continuation. I like to use Fibonacci levels alongside trend lines to manage this increased probability.

At the end of the day, don’t worry too much about drawing trend lines perfectly. What matters is that they make sense to you, showing where key decisions are being made in the market and helping you organize your trading plan.