Correctly drawing and placing trend lines is a basic skill all swing traders and actually any trader should master. Much like support and resistance levels, there are different opinions on what a valid trend line is. Below is the basic and most widely accepted version.
Trend lines are significant for much the same reason support and resistance levels are. As price moves along it typically retraces back and then continues on with the trend. These points offer the perfect chance for swing traders to place trades as price bounces off the trend line and continues in the direction of the trend.
For a trend line to be valid, price must touch it in at least two places but never pass through. More often than not, if a trend line has been formed, price will respect that line and bounce off it and continue on its way.
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In their most basic form, an uptrend line is drawn along the bottom of easily identifiable support areas (valleys). In a downtrend, the trend line is drawn along the top of easily identifiable resistance areas (peaks).
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Don’t make your trend lines overly complex. Also, don’t get too carried away. You should be able to spot significant trend lines on your chart and if you find yourself spending too much time looking for trend lines or you have too many trend lines then you have probably gone too far.
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