Description: Trading range between diagonal parallel lines. It forms when an up or downtrend is formed between parallel support and resistance lines. It suggests either a possible reversal in the trend or a change in the slope of the current trend.
Trade: 1) with emerging patterns, traders who believe the price is likely to remain within its channel can initiate trades when the price fluctuates within its channel trendlines, 2) with complete patterns (i.e. a breakout) – initiate a trade when the price breaks through the channel’s trendlines, either on the upper or lower side. When this happens, the price can move rapidly in the direction of that breakout.
Example: BADGER emerging of a Channel Down
