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How to Draw a Trendline on a Chart (And the Psychology Behind It)

 

Introduction

If you're new to trading and often find yourself confused while drawing trendlines, you're not alone. One of the most common beginner questions is:

 Do I connect the candle bodies or the wicks when drawing a trendline?

Let’s break this down in the simplest way possible.

What Is a Trendline?

A trendline is a straight line that connects price points on a chart to show the direction of the market — up, down, or sideways.

It's the market's path. It helps you visually identify whether the price is generally moving upward (an uptrend) or downward (a downtrend).

How to Spot an Uptrend

An uptrend happens when the price keeps making higher lows — meaning each low point on the chart is higher than the one before.

Example:

  • Imagine the price drops to ₹100, then rises.

  • Next time it drops, it goes only to ₹105 before rising again.

  • Then it drops to ₹110 and rises again.

These higher lows form a staircase going upward.

How to Draw the Trendline

To draw a proper trendline:

  1. Look for at least two or three higher lows in an uptrend (or lower highs in a downtrend).

  2. Try to touch as many points as possible along the trend — the more touches, the stronger the trendline.

  3. Don’t stress too much about only using candle bodies or wicks — it depends on the time frame you’re analyzing, we're going to discuss it below.

Candle Bodies vs. Wicks — Which One to Use?

Here’s where most beginners get confused. Should you connect:

  • The bodies of the candles?

  • Or the wicks (the thin lines above and below the body)?

The  Right Answer is:

Use whichever touches more points on the chart to draw a meaningful trendline.

Let’s simplify it based on your time frame:

🔹 If You're Analyzing on a Higher Time Frame (like 1D, 4H):

  • Include wicks in your trendline.

  • On higher time frames, candle wicks can be long, and ignoring them might give you a false trendline. As when you going to shift to lower timeframe you'll see a false breakout that can make you book a lose. 

🔹 If You're Trading Only on a Lower Time Frame (like 15M, 5M):

  • You can focus on candle bodies for more precision.

  • Wicks on lower time frames are often noise, and using them might confuse you with fake breakouts.

A Quick Tip to Avoid Fake Breakouts

If you ever feel like a price is breaking your trendline on the lower time frame...

👉 Zoom out to a higher time frame and redraw the trendline.
You’ll often see that what looked like a breakout was just a wick that makes sense in the bigger picture.

Can You Use the Same Rule for Downtrends?

Absolutely!

In a downtrend, you're connecting lower highs instead of higher lows. The same principles apply:

  • Use as many touches as possible.

  • Decide between bodies or wicks based on the time frame.

  • Stay consistent with your method.

Final Thoughts

Drawing a trendline is more of an art than a strict rule. The goal is to represent the market structure clearly and help you make better trading decisions.

Remember:

  • More touches = stronger trendline.

  • Higher time frame = include wicks.

  • Lower time frame only = bodies might work better.

  • Always zoom out to see the bigger picture.

If you found this helpful, share it with a fellow trader or bookmark it for your next chart analysis! 

Happy Trading! 

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