Series of Technical Analysis #1 / Structure of Channels

In Technical Analysis, channel structures are a chart structure that delimits two parallel trend lines (downtrend and uptrend). A channel defined by at least 3 points of contact (on support or resistance) can be ascending, descending, or horizontal. Channel structures are said to be “valid” if the price line touches the support or resistance at least 3 times.

An ascending channel is a continuation chart pattern of an uptrend. The ascending channel consists of two parallel bullish lines. Price moves between these two parallel lines.

The descending channel is a continuation chart pattern of a downtrend. Descending channels consist of two parallel bearish lines. Price moves between these two parallel lines.

The horizontal channel is a neutral chart pattern that signals investor indecision. A horizontal channel consists of two parallel horizontal lines that frame the development of price. The top line is called the "resistance line". The bottom line is called the “support line”.