Channels
Equidistant channel
Two parallel lines that contain the price: a trend line plus a parallel line on the other side.
The idea in plain words
Trends often move in a corridor: bounce off the lower line, rise to the upper line, pull back, and repeat. The channel shows that corridor.
How it is calculated
Click two points for the base line, then a third point on the other side to set the width.
Upper line = base line + constant distanceHow to use it
- In an up-channel, buy near the lower line and take profit near the upper line.
- A break out of the channel in the trend direction shows acceleration; against it, a possible end.
Drawing conclusions
- Failing to reach the upper line is an early sign of weakness.
Example
USDJPY rises within a channel 1.50 yen wide for a month; when a rally stalls halfway and the price breaks the lower line, the trend ends.
Prices in examples are illustrative.
Watch out for
- Channels drawn after the fact fit perfectly; real-time ones need adjusting.
A little history
Parallel trend channels are a classic chart technique.
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.