Counter Trendline Trading Strategy 2025 – Step-by-Step Beginner’s Guide
The Counter Trendline is one of the simplest and most profitable trading strategies in financial markets, enjoying popularity among both novice and professional traders. This is a price action strategy that can be implemented with nothing more than a single trendline. Since it is applied in the direction of the main market trend, it boasts a high win rate. Counter trendlines are commonly used to identify the end of a corrective move and the resumption of the main trend. They help traders pinpoint breakout points where the price is likely to continue in the direction of the prevailing trend.
Counter trendlines are divided into two types: ascending and descending. An ascending counter trendline is used in uptrends, while a descending counter trendline is applied in downtrends. This is a trend-following strategy, which allows traders to execute it with greater confidence. In this article, we will explore the different types of counter trendlines and learn how to trade using each of them. Stay with us.
Ascending counter trendline
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An ascending counter trendline is used during uptrends. When the market forms higher highs and higher lows or makes a strong upward spike, it then enters a small corrective phase with a downward corrective move. A trendline is drawn along this downward move. Once the price breaks this trendline upwards, it usually signals the resumption of the uptrend. At this point, traders can enter a long position and profit from the price increase. This strategy and its corresponding trendline are referred to as the ascending counter trendline.
As shown in the chart above, the market initially was in an uptrend and then the price enters a downward corrective move. Then, a descending trendline was drawn on this downward corrective move, and when it broke upwards, we entered a long position and were able to profit from the price increase and continuation of the uptrend.
Descending counter trendline
Photo by TradingView
A descending counter trendline is used during downtrends. When the market is in a downtrend and then makes an upward corrective move, we draw an ascending trendline on this corrective move. Once the price breaks this trendline downward, it resumes and continues the downtrend. At this point, traders can enter a short position and profit from the price decrease.
In the chart above, during a downtrend, the market starts a temporary upward corrective move on which we drew an ascending trendline. Then, the price breaks this trendline downward and resumes its downtrend, moving lower. We could enter a short position after the trendline breakout and profit from the downward price movement.
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