What are Trend Lines in Forex?

A trend is when prices move in a zigzag fashion but still follow an imaginary path or a trend in one direction. The trend can be further defined by a trend line. Trend lines connect significant lows in an uptrend and they connect significant highs in a downtrend, creating dynamic resistance.

  • Trendlines indicate the best fit of some data using a single line or curve.
  • A single trendline can be applied to a chart to give a clearer picture of the trend.
  • Trendlines can be applied to the highs and the lows to create a channel.
  • The time period being analyzed and the exact points used to create a trendline vary from trader to trader.

Types of Trends

There are three types of trends:

  1. Uptrend (higher lows)
  2. Downtrend (lower highs)
  3. Sideways trend (ranging)


An uptrend is an overall move higher in price, created by higher highs and higher lows. It describes when the price is moving upward or getting higher. The uptrend is therefore composed of higher swing lows and higher swing highs. As long as the price is making these higher swing lows and higher swing highs, the uptrend is considered intact.

  • Uptrends are characterized by higher peaks and troughs over time and imply bullish sentiment among investors.
  • A change in trend is fueled by a change in the supply of stocks investors want to buy compared with the supply of available shares in the market.
  • Uptrends are often coincidental with positive changes in the factors that surround the security, whether macroeconomic or specifically associated with a company’s business model.


downtrend is an overall move lower in price, created by lowers lows and lower high. A downtrend describes the price movement of a financial asset when the overall direction is downward. In a downtrend, each successive peak and trough is lower than the ones found earlier in the trend. The downtrend is therefore composed of lower swing lows and lower swing highs. As long as the price is making these lower swing lows and lower swing highs, the downtrend is considered intact.

  • Downtrends are characterized by lower peaks and troughs and mimic changes in the perception of investors.
  • A downtrend is fueled by a change in the supply of stocks investors want to sell compared with the demand for the stock by investors who want to buy.
  • Downtrends are responses to changes that surround the security, whether macroeconomic or those associated with a company’s business activity.

Sideways Trend

sideways trend is the horizontal price movement that occurs when the forces of supply and demand are nearly equal. In a sideways trend, the price moves in a narrow band, neither going upward nor downward. This typically occurs during a period of consolidation before the price continues a prior trend (trend continuation) or reverses into a new trend (trend reversal).

  • A sideways market, sometimes called sideways drift, refers to when asset prices fluctuate within a tight range for an extended period of time without trending one way or the other.
  • Sideways markets are typically described by regions of price support and resistance within which the price oscillates.
  • Trading a sideways market can be tricky, although certain options strategies maximize their payoff in such situations.

Here are some important things to remember using trend lines in forex trading:

It takes at least two tops or bottoms to draw a valid trend line but it takes THREE to confirm a trend line.

The STEEPER the trend line you draw, the less reliable it is going to be and the more likely it will break.

Like horizontal support and resistance levels, trend lines become stronger the more times they are tested.

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