No, we’re not talking about ESPN, National Geographic Channel, or Cartoon Network.
These channels aren’t television channels, they’re trend channels, sometimes also called price channels.
Trend channels are just another tool in technical analysis that can determine good places to buy or sell.
The upper trend line marks resistance and the lower trend line marks support. So both the tops and bottoms of channels represent potential areas of support or resistance.
Trend channels with a negative slope (down) are considered bearish and those with a positive slope (up) are bullish.
To create an up (ascending) channel, simply draw a parallel line at the same angle as an uptrend line and then move that line to a position where it touches the most recent peak.
We should do this at the same time you create the trend line.
To create a down (descending) channel, simply draw a parallel line at the same angle as the downtrend line and then move that line to a position where it touches the most recent valley.