Introduction to Technical Analysis Course (1): How to Draw Trendlines

The First Step in Trading: Identify the Trend

The most important first step in trading is recognizing the trend. Many experienced traders follow a simple idea: once a trend is established, it rarely changes overnight. If you are clear on direction, you can avoid trading blindly inside random price swings. Skilled traders focus on the primary trend on higher timeframes, while beginners often get trapped chasing short-term moves on lower timeframes. The difference is trend judgment.

What Is a Trendline?

A trendline is a straight line drawn along price action by connecting key swing lows or swing highs on a candlestick chart. Its purpose is to help you read the market, determine whether price is in an uptrend, downtrend, or range, and trade with the trend. A well-drawn trendline reflects the ongoing tug-of-war between buyers and sellers and makes support and resistance areas easier to spot.

Why Learn to Draw Trendlines?

Define trend boundaries clearly Trendlines visually mark potential support and resistance. In an uptrend, you can quickly see where pullbacks may find support. In a downtrend, you can spot where rebounds may meet resistance.
Filter out weak or false signals Proper trendlines help you identify false breakouts, especially when only the wick breaks the line. This reduces unnecessary losses caused by misleading signals.
Create a trading anchor Trendlines provide a clear reference for trend continuation versus trend reversal. Trading stops being “by feeling” and becomes more rule-based and consistent.
Trend-following is core profit logic When you can draw trendlines correctly, you are learning the foundation of trend trading. Trends often persist. Trading against the trend is a high-risk approach, and even when it works briefly, the dominant trend can quickly reverse those gains.

The Core Rules for Drawing Trendlines

A strong trendline follows three principles:

Three touches confirm the line A valid trendline should be respected by price at least three times. The more clean touches you get, the stronger the line. “Confirmation” means price reacts after touching the line, such as a quick bounce from support or a rejection from resistance.
Higher timeframe lines matter more Trendlines on higher timeframes (daily, weekly) are generally more reliable than those on lower timeframes (1H, 15m). Higher timeframes filter noise and better reflect real market structure.
Connect bodies, not wicks When possible, anchor trendlines to candle bodies rather than wicks. Wicks can be volatile and often create false breakouts. Body touches are typically stronger confirmations.

Trendline Walkthrough on Bitunix

We now move from theory to practice using the Bitunix candlestick chart to demonstrate how to draw trendlines properly.

Open the Bitunix website and enter the futures trading interface.
Select BTC/USDT Perpetual as the example.
On the left side of the chart, find the drawing tools and choose Trendline or Parallel Channel. This is the basic entry point for drawing trendlines.

Timeframe selection matters. For futures trading, the 4H or 1D timeframe is recommended first. The higher the timeframe, the more it filters random volatility. This makes trendlines more stable and more useful for decision-making.

1、Invalid Uptrend Trendline

Scenario 1: RIVERUSDT Perpetual (4H timeframe)
If you connect only two swing lows and the third swing low breaks below the line without any bounce, the trendline is invalid. A two-point line does not meet the “three-touch confirmation” rule.

In this case, you can treat the break as a potential bearish reversal setup. If the breakdown at point C is confirmed, it can be used as the key trigger for a short entry.

Scenario 2: BTCUSDT Perpetual (1D timeframe)
The three connected lows include wick lows rather than body lows. Later, price “touches” the line only with wicks and does not bounce. This trendline is also invalid and should not be used as support.

Previously, the three lows were supported by lower wicks. Then price broke below the original rising channel with a strong candle body. After the break, price retested the area but failed to reclaim the channel. This shows support has flipped into resistance, confirming a bearish structure.

In this situation, a common approach is to sell the bounce after the retest confirms price cannot regain the broken trend channel.

2、Valid Uptrend Trendline

ETHUSDT Perpetual (4H timeframe)
First, identify three swing lows. These lows should be based on the lower edge of candle bodies, and price should bounce after each touch. Connecting these three points forms a valid uptrend trendline. It becomes a support reference for future pullbacks. As long as price does not break below the line with a strong close, the uptrend structure remains intact.

A practical tactic is to enable Bitunix Price Alerts. When price pulls back toward the trendline, you can plan long entries near the line and follow the trend more precisely.

3、Invalid Downtrend Trendline

Scenario 1: HYPEUSDT Perpetual (4H timeframe)
After connecting two swing highs, if the third swing high breaks above the line without a rejection, the trendline is invalid. Without three confirmations, it should not be treated as reliable resistance.

In this case, the break can indicate a bullish reversal structure. Once the breakout at point C is confirmed, it can be used as a trigger for long entries.

Scenario 2: DOGEUSDT Perpetual (4H timeframe)
All three highs used are wick highs, and later the candle body breaks above the line with no pullback confirmation. This trendline lacks resistance value and is invalid. Breaking an invalid downtrend line without a retest suggests strong bullish momentum and a short-term shift from downtrend to uptrend. The core strategy should shift toward long positioning.

4、Valid Downtrend Trendline

SOLUSDT Perpetual (1D timeframe)
On the daily chart in a downtrend, first identify three swing highs. These highs should be based on the upper edge of candle bodies, and price should drop quickly after each touch. Connecting these points forms a valid downtrend trendline. It becomes the key resistance level for future rebounds. As long as price does not break above the line with a strong close, the downtrend remains effective.

Enable Bitunix Price Alerts. When price rebounds toward the downtrend line, you can plan short entries near resistance and execute trend-following trades more efficiently.

Bitunix Price Alert Setup Guide

App

Open the Bitunix App and log in.
Go to the Futures trading page, tap More (three dots) in the top-right corner, then select Price Alert.

Select the trading pair (for example, BTCUSDT), then choose the alert type:

Price Up/Down

Up/Down Percentage

Enter the target price or percentage, set the notification frequency and method, then tap Create.

Web

Open the Bitunix website, log in, and go to the Futures trading page.
Click the Price Alert icon in the top-right corner, then click Create Alert.

Select the trading pair (for example, BTCUSDT), then choose the alert type:

Price Up/Down

Up/Down Percentage

Enter the target price or percentage, set the notification frequency and method, then click Create.

Key Reminders

1) Avoid common beginner mistakes

Do not assume a two-point line is valid. If the third touch breaks through without any reaction, the trendline has no reference value.
Learn to separate true breakouts from false breakouts. If only the wick pierces the trendline but price does not close beyond it, it is often a false breakout and can be ignored.

2) Follow trend-trading discipline

Do not trade against the trend. Do not short while the higher-timeframe trend is still up. Do not “catch bottoms” while the higher-timeframe trend is still down.
Avoid flipping long and short repeatedly in a clear trend. Range-style trading can look profitable until one breakout causes a large loss.
Avoid excessive leverage. Leverage amplifies risk. No indicator can protect you from sudden black swan volatility. Lower leverage, or spot trading when appropriate, improves long-term survival.

Summary

The goal of trendlines is to help you identify direction and trade with the trend. In practice, start with higher timeframes (weekly and daily) to confirm the primary trend, then drop to lower timeframes to find better entries. Use trendlines as a reference for support and resistance and to filter false breakouts.

Most importantly, combine trendline tools with discipline: do not fight the trend, avoid constant two-way trading, and do not overuse leverage. When used correctly, trendlines become a consistent, practical tool rather than something that only looks good on a chart.

Disclaimer

This article is not intended to provide:

(i) investment advice or investment recommendations;

(ii) an offer or solicitation to buy, sell, or hold digital assets; or

(iii) financial, accounting, legal, or tax advice.

Digital assets (including stablecoins and NFTs) involve high risk and may be highly volatile. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. For your specific circumstances, consult your legal, tax, or investment professionals. You are responsible for understanding and complying with all applicable local laws and regulations.

About Bitunix

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