Technical Glossary / Trend Analysis
Resistance Trendline
A falling line over swing highs, acting as supply as the trend declines.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
A resistance trendline is drawn across lower highs in a downtrend. Rallies have stalled at the line. It is supply at a falling price: sellers have been willing to hit bids before the prior high is reached.
How to identify it
A downward slope on two or more swing highs, price mostly underneath. Do not confuse it with a horizontal ceiling.
Bullish reading
A close above a falling resistance line is a warning that the downtrend slope is breaking. Confirmation is a higher high or a broken lower-high sequence, not the line alone.
Bearish reading
A rejection at the line fits the downtrend. Shorts use the line or the lower high as invalidation. A close back under the line after a wick through it can still be a hold of resistance.
Common mistakes
Shorting the line on the first touch of a line drawn from only two points far apart.
Limitations
A broken resistance trendline often gets retested from above. The retest can be the better information than the first break.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.