Typically, drawing a trendline needs two points on the chart. However, a trendline needs a third point to be a valid trendline. For example, for an up trendline to be drawn, there must be evidence of a trend in development, i.e., two reaction lows (troughs) with the second trough higher than the first. A chartist has to make sure that a trough has been formed before validating a reaction low. Once two ascending lows have been pinpointed, a straight line can be drawn connecting the troughs and projected up to the right.
April 9, 2022
