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Chapter 8, Part V. Lines summary. Page 3

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 15, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Channels

    So, to draw a channel you should draw the parallel line with the same angle as an initial trend line. If we talk about an uptrend that is based on lows – then you should draw the parallel line by highs. For a downtrend, that is based on highs – parallel line will be based on lows.

    1. To draw an Up Channel, the market has to form higher highs and higher lows with the same speed;

    2. To draw a Down Channel, the market has to form lower highs and lower lows with the same speed;

    To draw any channel you should follow the procedure:

    1. Draw the uptrend/downtrend, according to rules, that we’ve pointed in previous part (trend lines);

    2. Clone it – draw another one with the same angle (parallel), adjust it length to the length of potential channel;

    3. Drag it to most recent high/low;

    4. If this is really an ascending/descending channel – then all previous highs/lows should lay with solid accuracy on dragged line.

    5. Don’t fit it forcedly to market action!

    When you draw a channel – lines have to be parallel to each other. In general, the bottom line of the channel is treated as support while the upper line – as resistance. Although there is an approach exists that tells that you may buy from lower border of the channel and sell from upper border we do not recommend making trades purely on any lines - trend lines, support/resistance or channels.
     
    Hamza Samiullah and fran alvarez like this.
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