Trend channels

Trend channels

1. Trend channels are formed by 2 parallel lines; a line of trend and one parallel to it.

   • The areas in which the price touches the base of the channel are points of purchase and the areas in which the price touches the ceiling of the channel are points of sale.

2. In bullish channels, first the uptrend line is drawn and then another line is drawn, parallel to the trend line, which passes through the relative highs of the trend that is developing.

   • Bearish channels work similarly but symmetrically

3. The base of the channel acts as support and the roof of the channel acts as resistance.

   • The wider a channel, the stronger the trend.