Trading channel

A trading channel is the area between the support and resistance lines on a chart, as shown by the upper and lower trend lines. The price of a market instrument will stay in its trading channel until a breakout occurs. There are three types of trading channel:
  • Ascending – buy at the bottom of the channel and then sell at the top
  • Descending – sell at the top of the channel and then buy at the bottom
  • Flat – both buying and selling are risky
Trading channel