What are “price channels” in trading?

    Channels are a concept in technical analysis. When the price is moving in a range between a support and a resistance level or two parallel trend lines for a period of time, it is said to be trading within a channel.

    There are two ways in which a channel can be used for trading decisions: trading the range or trading the breakout. You can trade the reversal by going short when the price reaches the upper boundary of the channel or by going long when it reaches the lower boundary of the channel. You can also choose to trade the breakout, i.e. going long when the price breaks out of the channel.

    There are three types of channels:

    Ranging channel


    Ascending Channel


    Descending Channel