Channel
Two parallel trendlines containing price action — an upper resistance line and a lower support line defining the trend's corridor.
A channel is formed by drawing a trendline along the swing lows (rising channel) or swing highs (descending channel) and a parallel line along the opposing swings. Price oscillates between the two lines, providing predictable support and resistance within the trend.
Channel trading approaches:
- Trend continuation: buy the lower channel line in an uptrend; sell the upper line in a downtrend.
- Breakout: a close outside the channel with strong volume signals acceleration or reversal.
Channels work until they don't — always monitor for channel breaks rather than mechanically fading the upper/lower lines.
Example
EUR/USD forms a descending channel over six weeks. The upper channel line (resistance) slopes from 1.1050 to 1.0920; the lower line (support) from 1.0980 to 1.0850. A trader sells rallies to the upper channel line and covers near the lower line, capturing 60–80 pips per swing.
Related Terms
Range
A sideways price structure bounded by identifiable support and resistance where neither buyers nor sellers dominate.
BeginnerResistance
A price level where selling pressure has historically halted or reversed an upward move.
BeginnerSupport
A price level where buying pressure has historically halted or reversed a downward move.
BeginnerTrend
The persistent directional bias of price over a defined timeframe — up, down, or sideways.
BeginnerTrendline
A straight line drawn through successive swing highs (downtrend) or swing lows (uptrend) to visualise the trend's slope.
Beginner