← Trendline Course · Module 3 of 15
Upward (bullish) and downward (bearish) — and exactly how to tell them apart.
All trendlines fall into one of two categories.
What it shows: Price is making higher lows over time — buyers are consistently stepping in at progressively higher prices. This is a sign of strength.
How to draw it: Connect a series of higher lows (the bottoms of pullbacks) with a diagonal line moving from lower-left to upper-right.
What it means: The trendline acts as diagonal support. Each time price falls back toward this line, buyers have historically returned. The trend is considered intact as long as price stays above this line.
Trading implication: While price is above an upward trendline, the bias is bullish (long). A break below the trendline signals potential trend reversal.
What it shows: Price is making lower highs over time — sellers are consistently stepping in at progressively lower prices. This is a sign of weakness.
How to draw it: Connect a series of lower highs (the tops of rallies) with a diagonal line moving from upper-left to lower-right.
What it means: The trendline acts as diagonal resistance. Each time price rallies back toward this line, sellers have historically returned and pushed price back down. The downtrend is considered intact as long as price stays below this line.
Trading implication: While price is below a downward trendline, the bias is bearish (short). A break above the trendline signals potential trend reversal.
| Upward Trendline | Downward Trendline | |
|---|---|---|
| Connects | Higher lows | Lower highs |
| Direction | Bottom-left to top-right | Top-left to bottom-right |
| Acts as | Support | Resistance |
| Bias | Bullish | Bearish |
| Break signals | Potential reversal down | Potential reversal up |
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