channel

Two parallel lines on a chart that contain current price action. The channel top should connect at least two highs on the currency charts and the channel bottom should connect at least two lows on the charts. Channel tops are used as resistance (areas where a bearish reversal might take place) and channel bottoms are used as support (areas where a bullish reversal might take place) by traders. Generally speaking the larger the time frame the more reliable channel support/resistance are. Also it is generally considered less-risky to trade in the direction of the overall trend of a channel (so if overall trend is bullish you would only look for buying opportunities at channel bottom and ignore channel tops).

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  1. Akinnuoye O Williams
    November 1, 2010 at 16:03Reply

    This is informative enough for beginners
    Well done guys

  2. Profile photo of Sunit Menon
    Sunit Menon
    December 23, 2011 at 08:29Reply

    Very informative for newcomers.

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