Price Channel Pattern

A price channel is a continuation pattern where the market price of the stock fluctuatest up and down between two horizontal lines. An uptrending price channel consists of a channel created by a support line connecting the dips and a resistance line connecting the peaks. In a uptrending channel pattern the overall slope of the pattern is positive. An uptrending pattern is considered bullish.

Trading volume will be increasing during dips in the channel.

The downtrending channel pattern is the same pattern but with a negative slope. Trading volume once again peaks during the dips and dips during the momentary reversals. The time to buy will be when the price breaks through the resistance line. The downtrending price channel is considered bearish.

The first warning of a trend change occurs when prices fall short of channel line resistance. Be wary if the price breaks through the support line. This will be a good indication that the rally is over and it is time to sell.

Profits-Prophet.com