Let’s continue reviewing support and resistance.
Another thing to remember is that when the price passes through a resistance level, that resistance might become support.
The same could also happen with a support level. If a support level is broken, it could potentially become a resistance level.
We know this concept as “role reversal“.
In their most basic form, we drew an uptrend line along the bottom of easily identifiable support areas (valleys).
In a downtrend, we drew the trend line along the top of easily identifiable resistance areas (peaks).
There are three types of trends:
There are three types of trend channels:
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.
For 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.
To create a sideways (horizontal) channel, simply draw a parallel line at a zero or flat angle.
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