Trend lines, rays, extended and arrowed lines

The idea in plain words

In an uptrend each pullback tends to stop a little higher than the last. Joining those lows with a line shows the trend's path; as long as the price stays above it, the trend is intact. A ray extends the line into the future, an extended line both ways, and an arrowed line simply points.

How it is calculated

Click two points. For an uptrend, connect two rising lows; for a downtrend, two falling highs. A third touch makes the line more meaningful.

Price on the line at any time = price at point A + slope × (time − time at point A)
slope = (price B − price A) ÷ (time B − time A)

How to use it

• Buy near a rising trend line in an uptrend; sell near a falling one in a downtrend.
• A clear break and close through the line warns the trend may be over.
• Use the Extend setting to project the line into the future as a ray.

Drawing conclusions

• Steeper lines break sooner; gentle lines last longer.
• After a break, the old line often becomes resistance (or support) on a retest.

Watch out for

• Lines drawn through candle bodies versus wicks give different results; be consistent.
• Two points always make a line; three touches make it significant.

A little history

Trend lines are among the oldest chart tools, drawn by chart readers for more than a century.