Trendlines

A trendline is a straight line that connects specified prices for a price series. The basic trendlines are:

Up trendline connects successive lows of rising prices.
Down trendline connects successive highs of falling prices.
Sideways trendline connects successive lows for flat prices.

Trendlines can be for the short term (days, weeks, and months) and long term years). Traders study short-term trendlines and investors study long-term trendlines. Our emphasis is on long-term trendlines.

Up Trendline

The long-term up trendline for the S&P 500 from 1982 to March 2000 connects the major lows for the period. The chart shows the the trendline for monthly closes of the index plotted on a logarithmic scale, which permits you to draw a linear trendline for the period.

Sideways Trendline

The S&P 500 traded in a sideways pattern for many years. The sideways trendline touches the bottom of the trading range.

Down Trendline

The downtrend line of the post bubble downside connects major intermediate highs.