Qazi Forex Tips
In this lecture
- What a price channel is (continuation and sometimes reversal)
- Bullish, bearish and horizontal channels
- How to draw the main trendline and the channel line
- Entering at high-probability areas and taking profit
- Channel breakouts
Lesson notes
Three types
- Bullish (ascending): higher highs and higher lows between two rising lines.
- Bearish (descending): lower highs and lower lows between two falling lines.
- Horizontal: a range between flat support and resistance.
How to draw it
- Draw the main trendline on at least two swing lows (uptrend) or swing highs (downtrend).
- Copy it parallel and place it on the opposite swings: this is the channel line.
- A third touch on either line confirms the channel.
How to trade it
- With the trend: buy near the lower line of a bullish channel, target the middle or the upper line.
- Exits: take profit near the opposite line, where price often turns.
- Breakouts: a close outside the channel, especially against the channel's direction, warns that the move is ending. Wait for a retest before trading the break.
Khulasa (Roman Urdu / Hindi)
- Channel: do parallel lines ke beech price.
- Bullish, bearish aur horizontal channel.
- Trend ki taraf neeche wali line par buy, oopar wali line par profit.
- Channel se bahar close + retest = breakout trade.
Questions
What is a price channel in trading?
Price moving between two parallel lines: a trendline on the swings on one side and a channel line on the other.
How do you draw a price channel?
Draw a trendline on two swing points, then copy it parallel onto the opposite swings. A third touch confirms it.
Is a price channel bullish or bearish?
An ascending channel is bullish, a descending channel bearish and a horizontal channel neutral (a range).
How do you trade a channel breakout?
Wait for a candle to close outside the channel and, ideally, a retest of the broken line before entering.
Where should the stop loss go in a channel trade?
Just beyond the channel line you entered from, outside the last swing.
What is the difference between a channel and a wedge?
Channel lines are parallel; wedge lines converge.
Related lessons
Price Action Basics
How to draw trendlines correctly: swings and rulesChart Patterns
Rising and falling wedges: how to spot and trade themChart Patterns
Flag pattern trading strategy: bull flag and bear flag
How to draw trendlines correctly: swings and rulesChart PatternsRising and falling wedges: how to spot and trade themChart PatternsFlag pattern trading strategy: bull flag and bear flagEducation only, not financial advice. Trading forex, Gold and CFDs carries a high risk of loss. Examples are for learning; test any method on a demo or in a simulator before using real money.