How to Use Trendlines in Your Trading (part2)

Adjusting Trendlines

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Once drawn, trendlines often need to be adjusted. Prices rarely move uniformly for a prolonged period. This means any acceleration or deceleration of the trend requires adjustments to the trendline.
To figure out whether your trendline needs adjusting, watch for any instances when the price breaks through your lines. If the price moves below your trendline in an uptrend, then you need to adjust your line. The same goes for downtrends when the price moves above the trendline.
Keep in mind that adjusting a trendline doesn't mean the trend has changed. An uptrend is characterized by higher highs and higher lows, and as long as those keep happening, it's still an uptrend. You may find that you adjust your trendlines several times within a single uptrend.

Trendlines As a Guide

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The need for constant adjusting makes a trendline imprecise for use as a trade signal. Consider that a trendline drawn at a slightly different angle can make a big difference in what price that trendline intersects with over time.
While you can use trendlines as a guide, you must use more precise criteria for determining when to enter or exit a trade. These criteria could include a certain size move back in the trending direction, a trigger based on an engulfing pattern (where the next bar is larger than the previous one, engulfing it), or another type of indicator that adjusts more precisely and quickly to changes in volatility.
If you use trendlines as just a guide, then you don't need to worry about drawing trendlines along the exact highs or lows. Draw "trendlines of best fit"—the ones that provide visual clues about potential trade areas.
Since the trendline isn't being used as a specific trade signal, rough trendlines can provide you with relevant information about the trend without forcing you to readjust it constantly.

The Bottom Line

Trendlines are a great tool for showcasing short-term trends within the overall trend. Pay attention to price action, and always consider it when using trendlines. If the price makes lower lows and lower highs, it's still a downtrend—even if the price moves above a descending trendline. If the price makes higher highs and higher lows, the price still has an uptrend even if it moves below the trendline. 
A trendline needs to be adjusted often, especially when day trading. Use a "trendline of best fit" to avoid constantly adjusting. It still shows the trend and when the trend may be reversing.
Use trendlines to alert you of potential trade opportunities, and use price action signals to determine exactly how to seize those opportunities.