Crypto glossary
Trend line and channel
A trend line connects successive highs or lows on a chart to show a trend's direction; two parallel lines around the price form a trading channel.
An uptrend line is drawn under at least two rising lows, and a downtrend line over at least two falling highs; a third touch is usually taken as confirmation. Drawing a parallel line on the opposite side of price creates a channel, within which the asset oscillates while the trend lasts. The slope of the line shows how fast the trend is moving.
Trend lines are among the simplest tools in technical analysis and are used on every timeframe. In crypto, long-term lines drawn across bitcoin's cycle highs or lows are popular, as are channels on altcoins that rally in steady steps. A decisive break of a trend line, especially with rising volume, is read as a warning that the trend may be ending.
They are also subjective: two analysts may connect different points, wicks or candle bodies, and the result changes on a logarithmic chart compared with a linear one. Lines that are redrawn after every break lose their value.
Example
SOL has bounced three times off a rising line connecting its lows since spring. When a daily candle closes well below it on heavy volume, swing traders reduce their long positions.