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Chapter 8, Part III. Channels.

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, May 15, 2011.

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  1. Administrator

    Administrator Just Administrator :-)

    Sep 24, 2007
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    Part III. Channels [​IMG]
    Commander in Pips: Ok, let’s continue to talk about different lines – today this will be channels.

    Pipruit: And what is your favorite one?​

    Commander in Pips: Heh, I like Discovery, but we will talk about quite another type of channel…


    Commander in Pips: It is very simple to draw a channel – we already know how to draw trend lines. So, to draw a channel you should draw a 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 downtrend, that is based on highs, the parallel line will be based on lows.

    There are a couple of rules that could be allied to draw a channel:

    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;

    3. And as with simple trend lines – you should not force the lines of channel if they do not fit to the market action. If market creates highs and lows and lines have different angle – do not try to fit them to a parallel movement. This is just not the channel!

    Channels also are a tool of technical analysis and could be used for estimation of possible areas to Buy or Sell, because Channel lines have a quality of support and resistance similar to simple trend lines.

    Channels have the same properties as trend lines, so if you’ve forgotten some – reread the two previous lessons.
    As with trend lines, there are could be three types of channels:

    1. Ascending or up channel

    2. Descending or down channel

    3.Sideways channel
    #1 Administrator, May 15, 2011
    Lasted edited by : Feb 12, 2016
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