Channel Line
Price Channel is a price movement that is bound by an upper and lower trend line. The upper trend line marks resistance and the lower trend line marks support. Price channels with negative slopes are considered bearish and those with positive slopes bullish.
Basic pattern can also be used together with Price Channel of Elliot Wave Theory. Inspired by the Dow Theory and by observations found throughout nature, which the Elliott Wave Theory identifies a repetitive pattern of five waves in the direction of the main trend followed by three corrective waves. These waves are used to predict movement of the stock market. Ralph Nelson Elliott used Price Channels as a method of arriving at price objectives and to help confirm the completion of wave counts: Price Channel Technical Indicator.
Price Channel
In a bullish price channel, some traders look to buy when prices reach main trend line support. Conversely, some traders look to sell (or short) when prices reach main trend line resistance in a bearish price channel. As with most price patterns, other aspects of technical analysis should be used to confirm signals.
Main Trend line: It takes at least two points to draw the main trend line. This line sets the tone for the trend and the slope. For a bullish price channel, the main trend line extends up and at least two reaction lows are required to draw it. For a bearish price channel, the main trend line extends down and at least two reaction highs are required to draw it.
pa: The line drawn parallel to the main trend line is called the channel line. Ideally, the channel line will be based off of two reaction highs or lows. However, after the main trend line has been established, some analysts draw the parallel channel line using only one reaction high or low. The channel line marks support in a bearish price channel and resistance in a bullish price channel.
Er Jeevika Mehra
www.aisikitesi.com
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