How to Draw It, and Its Role
The basic approach is to connect a series of rising lows in an uptrend, or a series of falling highs in a downtrend. Some view the price as likely to bounce when it approaches this line, or to gain momentum when it breaks through, and the line is used to visually organize the direction of price movement.
How to Read It, and What to Watch Out For
Because a trendline is a line drawn by the analyst, the same chart can look different depending on how the line is drawn — an inherently subjective element. A bounce off the line or a break through it is not an absolute trading signal; it is generally used as a supplementary guideline for grasping the direction of the market.