Price Channel Pattern

What is a price channel pattern?

A price channel occurs when price becomes bounded between parallel support and resistance lines. These trendlines can point up, down or even horizontally.

Download our free chart patterns PDF for a guide to 20 classical chart patterns with over 100 interactive charts, also on TradingView.

Duration

A price channel can occur over various time frames.

Characteristics

A price channel is defined by two parallel support and resistance lines.

1. Support is called the 'main trendline' and resistance is called the 'channel-line' in the case of an upward sloping price channel. The reverse applies in the case of a downsloping price channel.
2. The more price points a trendline connects, the stronger its predictive power.
3. Trendlines built over weeks or even months have stronger validity.

Trading volumes

A price channel has no volume requirements.

Price channel trading tips

• Bullish price channel: if you expect the price to continue fluctuating up between these parallel lines, you could buy at the main trendline (support), with a view to sell higher at the channel-line (resistance). Alternatively, you could open a long position and benefit from the rise in price without actively trading the market.
• Bearish price channel: if you expect the price to continue fluctuating down between these parallel lines, you could sell at the main-trendline (resistance) with a view to buy lower at the channel line (support). Alternatively, you could open a short position and benefit from the fall in price without actively trading the market.

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About the author

I'm Stéphane, a trader and an entrepreneur. My mission with TrustedBrokers is to help you find the right broker for you, whether you're a beginner or a pro. I've personally used and tested the brokers on our service, opening and funding real-money accounts, contacting customer service and placing trades. I started my career in investment banking in London.