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Drawing Downward Trend Lines

By Adam Milton, About.com

3 of 6

Wait for a New Low

Trend Line Chart

Downward Movement and New Low

The second requirement for a downward trend line is that the prices move downwards from the high reversal, and make a new low. The new low will not be part of the actual trend line, but it is the beginning of the downward price movement (the trend). If the new low is not made, then the prices are not starting a downward trend, and may move sideways instead. The downward price movement and new low are shown by the yellow arrow in the example chart.

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