A trendline is just support or resistance that slopes. In an uptrend you draw it under the rising swing lows; in a downtrend you draw it over the falling swing highs. Draw a parallel line through the opposite swings and you have a channel.
How to draw one honestly
The test is simple: a trendline should touch, not cut through, the candles in between. If your line passes through the middle of three candle bodies to reach two swing points, you have drawn the line you wanted rather than the line that is there.
Use the wick or the close, but pick one and stay consistent. Most traders use closes for the body of a move and wicks for the extremes; the important thing is that you are not switching depending on which makes your line look better.
Two touches versus three
Two points always make a line — that is just geometry. A trendline only becomes information on the third touch, because that is the first time the market had the chance to break it and chose not to. Before that you have a hypothesis.
What a break of a trendline means
Less than beginners assume. A trendline break tells you the pace of the move has changed. It does not tell you the trend has reversed. In a strong trend, price will often break the line, drift sideways, and then continue in the original direction — which is exactly what the continuation patterns in Part 3 look like.
The useful question is not "did it break the line" but "what did it do next": did it accelerate away, or did it start making swing points in the other direction?
Channels as a trading tool
Channels are more useful for targets than for entries. If price is oscillating between the two lines, the far line is a reasonable place to take partial profit — not because the channel is magic, but because it is where the other side has been showing up.
How to check this yourself
Draw a trendline on a chart you have not traded, then move forward one bar at a time and write down what happened at each touch: bounce, break, or sideways slice. Do this for a dozen trendlines. You will quickly notice that the lines you drew through closes hold far more often than the ones you drew through wick tips — and that is a lesson no amount of reading will teach you as well.