Price Channel

A price channel is two parallel trendlines drawn around a trending market. The bottom line connects the swing lows, the top line is drawn parallel to it across the swing highs. Channels can slope up (bullish), down (bearish), or run sideways (range channel). Price oscillates between the two lines as the trend continues. Channels work because trending markets respect their internal structure. Buyers step in at the lower line, sellers step in at the upper line, and the trend continues until the channel breaks. Until then, the channel gives you clean entry and exit zones with measurable risk. The trade is simple: in an uptrend channel, buy near the lower line with a stop just below it. In a downtrend channel, short near the upper line with a stop just above. Targets are usually the opposite line.