Trend channel

15 Feb at 12:40

The channel is a trend indicator.

Trend channel

This is an indicator that can be used on a daily chart as above. The channels are used to identify market trends, including the basic trend, here on the EUR / USD. To draw a channel, connect the low points with a straight line, this line will be right of the channel support. Then draw the same line with the high points of your chart, this line will be the right of resistance from your channel.

It is possible to use the support line and draw a parallel to create the line of resistance on the graph, as above. The more your rights touch the low or high points (to the right of resistance), the more relevant your channel will be. You can then add another parallel, which can indicate the intermediate points of changing intra-channel trends (blue line on the graph).

The taking of positions may be performed on rebound of the right support, on breaking of the intermediate spur and rebound on the right of resistance.

When a position is taken, place the stop quickly a few pips below the support line or above the line of resistance in case of a short position. This stop is essential since breakage of channels are often violent, especially on daily channels. The profit-taking will be done through the right (in blue) or on top of the channel for a long position or bottom of the channel for a short position.

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