Channels on charts

Trading by channels can give you a strong additional support/resistance level.

Take a look at the recent GBP/USD chart.



Based on red points we could build channel borders. It is necessary to have atleast 3 points to build a channel, however here we used 4 points to be sure that channel borders lies under the same angle. Beginning with the first yellow point you can make a sell or buy order accordingly. Channels do not last long so you have to be very vigilance. Use these channels together with other indicators and do not assume the rate will bounce off the channel more than 6-8 times.

Channels can be narrow, widen or equiangular. They also can be called as triangles. If you look at the charts you could find a lot of triangles, however it is very difficult to find one when it is developing.