📊 Charts & Technical Analysis · Lesson 4 of 9 · 8 min
Trends & Trendlines
📈 'The trend is your friend' is the most repeated phrase in trading — usually said by someone who just ignored it and lost money. Let's actually learn what a trend is so you're not that guy.
💡 Key idea
Uptrend = higher highs + higher lows. Downtrend = lower highs + lower lows. Trade with it, not against it.
🧠 Why it matters
A trend is the general direction price is moving. An UPTREND makes higher highs and higher lows (stairs up). A DOWNTREND makes lower highs and lower lows (stairs down). SIDEWAYS ('ranging') goes nowhere. You draw a TRENDLINE by connecting the rising lows in an uptrend (or the falling highs in a downtrend) — as long as price respects that line, the trend is intact. Trading WITH the trend is generally higher-probability than fighting it.
🌍 In the real world
💡 Fighting a strong downtrend by 'buying the dip' over and over is called catching a falling knife — it looks cheap the whole way down. Respecting the trend means waiting for it to actually turn before betting the other way.
📌 Takeaways
- Uptrend = higher highs and higher lows
- Downtrend = lower highs and lower lows
- Trading with the trend beats fighting it
✅ Test yourself
An UPTREND is defined by...
- Lower highs and lower lows
- Higher highs and higher lows
- A flat line
- One big spike
Answer: B · Higher highs and higher lows
Up = a staircase of higher highs and higher lows.
'Catching a falling knife' means...
- A safe strategy
- Repeatedly buying into a strong downtrend
- Selling at the top
- A type of candle
Answer: B · Repeatedly buying into a strong downtrend
It's buying something that keeps falling because it 'looks cheap' — often painful.
How do you draw an uptrend line?
- Connect the highs
- Connect the rising lows
- Connect random points
- Draw it flat
Answer: B · Connect the rising lows
In an uptrend you connect the higher lows; price staying above it means the trend holds.
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