Sometimes a trendline that looks correct will have to be redrawn. A trendline that has been successfully tested eight times, for example, is obviously more significant than one that has only been tested three times. Trendlines often give us a good indication of the slope and pace of price action. Determine a valid breaking of a trendline Generally a close below the trendline is much more significant than an intra-day penetration. In addition violation of the trendline has to be put in the context of overall market action.
Some traders use a price filter to determine a valid breakout below the trendline.
Traders will also use guidelines in setting price filters, for example the price filter can be set as a percentage of the volatility of the stock. A very common filter is the two-day rule . It is a good idea to continuously project older trendlines out into the future. The 50 and 200-day moving average lines are often used to assess area's of support and resistance. Many growth stocks will continuously bounce off of the 50-day moving average and as such this indicator can be used as a trendline.