How to Draw Consistent Trendlines—and When to Redraw Them
Set trendline anchor points and the price scale before drawing. A hypothetical example explains why repeatedly moving a line can distort analysis and why chart zoom can make slopes misleading.
A trendline connects selected turning points as an observation tool, so changing its anchor points or price scale can change the conclusion. Connecting lows in an uptrend and highs in a downtrend is common, but selecting only instances where a line worked cannot validate it. The key is to keep the original line and revised lines as separate records.
Choose anchor-point rules before drawing the line
Any two points define a straight line. Drawing one therefore does not itself provide evidence of a trend. Check which dates and prices you selected and whether other lows between the two points lie far from the line. A line connecting wick extremes and one connecting closing prices address different questions, so do not alternate between them simply to favor your interpretation. A third reaction is meaningful as a new observation, but it does not guarantee that the same line will work in the future. You can also examine how much the result changes if you shift the starting point by one candle.
Distinguish the on-screen angle from the percentage price change
Expanding the vertical scale can make a gradual move look steep. Instead of describing an advance in degrees on the screen, record the time interval and percentage price change between the two anchor points. A straight line on a linear price scale suits comparisons of constant absolute price increases, while one on a logarithmic scale suits comparisons of constant percentage increases. Scale selection matters over long periods or large price changes. Save your settings: if the scale used for analysis differs from the scale used to check the line, your assessment of a break can change.
Keep line revisions in your analysis history
A new low may justify redrawing an existing line. But lowering the line every time price breaks it and then claiming the trend held makes the earlier judgment impossible to evaluate. First record the date the original line broke, then add a new line. Define the tolerance around the line and whether you use intraday or closing prices in advance. If a small change in criteria reverses the conclusion, the assessment lacks stability even if the line looks precise. In that case, a broader price zone or a table of highs and lows by period can explain the situation more clearly.
Worked example
Hypothetical example: Connecting lows of 10,000 won and 11,000 won separated by 10 trading days on a linear scale produces a line rising by 100 won per day. Extending it by the same interval gives 12,000 won. On a logarithmic scale, applying the same 10% increase again gives 12,100 won. An actual price of 12,050 won lies in different positions relative to the two lines, so first check which scale was used.
What to check
- Record the anchor dates and prices and whether you used wicks or closes.
- Distinguish the price scale from the chart's zoom level.
- Preserve the original line and the break date before revising it.
- Check whether changing the starting point substantially changes the conclusion.
Sources and primary materials
This is educational material about research methods. For an actual company decision, verify the filings and primary sources for the relevant period.