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Channel

A pure uptrend is a series of higher highs and higher lows, and a downtrend is a series of lower highs and lower lows. And in this regard, a CHANNEL is the purest form of trending.

When prices are trending in a CHANNEL, highs tend to peak upon testing the pattern’s resistance trendline, and lows tend to bounce upon testing the support trendline. Volume in an uptrend should increase into the CHANNEL pattern’s rally legs, and decrease into its declines. Similarly, volume in a downtrend should increase into the CHANNEL’s declines, and decrease into its rallies.

  1. Trending
  2. Correcting
  3. False break
  4. Breakout

 

 

A CHANNEL pattern’s first reversal attempt doesn’t often succeed before retracing back to its breakout level to consolidate. And until the breakout’s trend were to resume, the pattern is vulnerable to resuming its original trending direction.