Trends/Trendlines and channels

Downtrend line

A straight line drawn over a series of falling highs. It marks the ceiling price has kept bumping into while it dropped.

Trendlines and channelsBest on 3M, 6M, 1YAlso called falling trendline, supply line

Illustration of the downtrend line shape. It is a sketch, not real price data.

What it shows

A downtrend line connects two or more swing highs (the tops of bounces) that each sit lower than the one before. The line slopes downward and stays above price. Each time price rises to the line and turns back down, that is a touch.

It describes where sellers have shown up so far. The more touches, the more established the line is.

How we find it

The same code that draws it on your chart follows these steps, with the same result every time.

Find swing highs: a bar whose high is the highest of the surrounding bars on both sides.
Take the two most recent swing highs, where the later one is lower, and draw a line through them.
Extend the line to the right and count later swing highs that land within the tolerance.
Keep the line only if price did not close above it between the first and last touch.

Starting values: Swing size 3 bars each side (daily), 2 (weekly); Tolerance 1.0% of price; Minimum touches 3; Minimum length 20 bars. These are proposed and will be tuned on real price data before launch.

How to read it

Each dot is a touch: price rose to the line and turned back down.
A line that has held for many touches is more established than a new one.
The distance between price and the line shows how far price sits below the ceiling.

Status labels you may see

Label	What it means
Below the line	The last close is under the line.
Testing the line	The last close is within 2% of the line.
Closed above the line	The last close is over the line. The line no longer holds.

What cancels it

A close above the line. After that it is a broken line, not a live one.

What traders check next

Whether price closed above the line or only poked through it during the day.
How many touches the line has.
Whether volume rose when price came close to the line.

Limits

Two points always make a line, so a two-touch line proves little.
Choosing different highs can change the slope a lot.
A downtrend can end without ever touching its line again.

Try it in forecastviz

Open any ticker and choose Trendlines and channels → Downtrend line in the left menu.
Switch between 3M, 6M, 1Y to see how the picture changes.
Compare with Uptrend line and Descending channel on the same chart.

Open on a ticker

Questions

Is this the opposite of an uptrend line?

Yes. An uptrend line connects rising lows below price. A downtrend line connects falling highs above price.

How is it different from resistance?

Resistance usually means a flat price level. A downtrend line is a resistance that slopes down over time.