No, we’re not talking about ESPN, National Geographic Channel or Cartoon Network.
Still, this doesn’t mean that you should walk away like it’s a commercial break- channels can be just as exciting to watch as Game of Thrones or Keeping Up with the Kardashians!
Channels are just another tool in which can be used to determine good places to buy or sell.
Both the tops and bottoms of channels represent potential areas of support or resistance.
To create an up (ascending) channel, simply draw a parallel line at the same angle as an uptrend line and then move that line to position where it touches the most recent peak. This should be done at the same time you create the .
To create a down (descending) channel, simply draw a parallel line at the same angle as the downtrend line and then move that line to a position where it touches the most recent valley. This should be done at the same time you create the .When prices hit the LOWER , this may be used as a buying area.
When prices hit the UPPER , this may be used as a selling area.
Types of channels
There are three types of channels:
(higher highs and higher lows)
(lower highs and lower lows)
Horizontal channel (ranging)
Important things to remember about drawing trend lines:
When constructing a channel, both must be parallel to each other.
Generally, the bottom of channel is considered a buy zone while the top of channel is considered a sell zone.Like in drawing , DO NOT EVER force the price to the channels that you draw!
A channel boundary that is sloping at one angle while the corresponding channel boundary is sloping at another is not correct and could lead to bad trades.