2003issue C101
Two-anchor trendline construction without cut-through
A trendline is a straight chart segment that joins two legally chosen same-side swing points. Lock those anchors, reject any cut-through, and treat a later cross as a redraw-or-confirm fork rather than a finished reversal.
- An uptrend-line is built from the lowest low to the highest low immediately preceding the highest high. A downtrend-line is built from the highest high to the lowest high immediately preceding the lowest low.
- A connecting-point is invalid if the finished segment passes through any intervening price bar. A cut-through of even one bar is treated as a sign that the segment is probably too long for the actual trend.
- As a bull or bear market extends, the line often has to be redrawn rather than left fixed. Penetration can warn that the trend is ending, or it can mean only that a new drawing is required.
- After a break, confirmation is often taken from another tool or from price action such as a follow-through day or a retest of the line as support or resistance. Hindsight drawing makes a finished trendline look more reliable than a line that still has to be updated.
Start with two legal anchors
A trendline is a straight chart segment joining two legally chosen same-side swing points. After those anchors are set, the segment is used as a condition that price can test or cross.
An uptrend-line is constructed from the lowest low to the highest low immediately preceding the highest high, provided no intervening bar is cut. A downtrend-line is constructed from the highest high to the lowest high immediately preceding the lowest low, provided no intervening bar is cut.
The second swing is the connecting-point. That choice is invalid if it forces the finished segment through any price between the two anchors.
When the line is crossed
As a bull or bear market extends, the line often has to be redrawn rather than left fixed. Hindsight drawing makes a finished trendline look more reliable than a line that still has to be updated as the move unfolds.
Penetration is price crossing a previously valid segment. That cross can be an early reversal warning, but it can also mean only that the line needs to be redrawn.
After a break, confirmation is often taken from another tool or from price action such as a follow-through day or a test of the line as support or resistance. A later return that treats the old line as the opposite side of the market is a retest. It is confirming price action, not the break itself.
A historical retest on December gold
On the December gold chart, prices broke beneath the line in early June, rose to test it in mid-June, then retreated after that test. In that sequence the mid-June return is a retest of the broken segment, not the break itself.
December gold daily closes around the June trendline break
Closes are approximate to the nearest dollar from a dark candlestick pane. Wicks reach nearer 316 and 372 than the closes do. Only the 352.80 last price is printed on the axis.
TradersWeek editorial reading
This is a TradersWeek editorial reading, not an archive claim. Use the two-anchor rule as a construction checklist: lock two legal same-side swings, discard any segment that creates a cut-through, and only then treat the line as a live condition.
A later penetration is a fork, not a finished reversal. Either redraw from a new legal pair of anchors, or wait for confirmation from another tool or from price action such as a follow-through day or a retest. Do not read a hindsight line as if it had been that stable while the move was still unfolding.
All readings on this track · 53 readings
- 1984Constructing the slow stochastic from a five-session range
- 1985Gold-proxy trendlines and a January support base
- 1988Construct a five-week new-highs total as a breadth chart
- 1988Stacked channel, trendline, and moving-average warnings in 1987
- 1989Auditing fifth-wave counts with equality, Fibonacci, and trendlines
- 1990Money-fund maturity as a companion Eurodollar chart
- 1990Constructing wave targets from ratios, triangles and trendlines
- 1992Nested time frames for trend and channel signals
- 1992A pre-trade checklist for trendline breaks and loss limits
- 1992Bond-fund timing inside trendlines, retracements, and dual averages
- 1992Two-point trendline construction from rise over run
- 1993Disposable chart ratings from confirmed level tests
- 1993When trend channels define fair value after dislocations
- 1993Valid trendline anchors for three-part reversals
- 1994Pairing stochastic divergence with trendline invalidation
- 1995Constructing measured targets after trendline breaks
- 1997A three-part pullback plan with RSI, Fibonacci retracements, and a tight trendline
- 1998Rule-based Trendline construction for testable entries
- 2000Constructing trendlines, breaks, and role reversal
- 2000Constructing speed resistance lines from trend extremes
- 2000Nasdaq tech cycle stages with a 15-day average and trendlines
- 2002Two-session candlesticks that test support, resistance, and trendlines
- 2002Constructing Fibonacci ratio grids from a peak and a trough
- 2002Evaluate trendline geometry before trusting a breakout
- 2002Trendline, volume, and breakout hypotheses versus cycle-end stories
- 2003Writing the long S&P 500 trendline and cycle junction as one hypothesis
- 2003A three-event trendline reversal checklist
- 2003Reverse-engineered Relative Strength Index price curves
- 2003Two-anchor trendline construction without cut-through
- 2004Treat a 15-minute e-mini stair-step as congestion under a daily lid
- 2005A 50-day average, a trendline break, and an open barrier flip
- 2005Matching a forty-day average to a crude trendline
- 2006Constructing a relative spread-strength oscillator for staged cycle confirmation
- 2006Constructing a log-change probability line for trend and range rules
- 2007Linked cross breaks as dollar-pair filters
- 2007A case study in support, resistance, and trendline role reversal on currency charts
- 2007Reading trendline breaks in a housing-sector case
- 2007Constructing replaceable trendlines for break signals
- 2007Reading trendline breaks before the mechanical signal
- 2007Trading choppy forex trends with channels and Fibonacci breaks
- 2007A stacked hypothesis from wave, trendline, ratio, and candle
- 2008Exit rules before entry: trendline, support, and stops
- 2008Capitulation headlines need trend confirmation
- 2008RSI divergence classes, ratio thresholds, and trendline tests
- 2010Support and resistance as falsifiable chart hypotheses
- 2012Reading a 2012 software directory as a breakout and channel case study
- 2013Treat a currency position as a regime, then map shared levels
- 2014Evaluating trendline swing size per market
- 2018Intermarket regime stress and the January 2018 trendline break
- 2018Weekly and daily Stochastic oscillator construction on a single daily chart
- 2018Constructing trendlines, support, and breakout targets from crowd exits
- 2019Trendline break and Fibonacci retracement as a falsifiable outlook check
- 2019Monthly S&P 500 false-break versus the decade trendline