An Introduction to Trend Channels

Most people who trade the financial markets most especially those in the crypto and forex market do think trendline and trend channels are the same thing which they're not. Trendlines is what we learned some weeks ago which you can read up from here.

---

Trend Channels

If you should draw a trendline and add a step further to the line you have drawn on either the Downtrend or Uptrend side, it means you have drawn a channel.

Trend Channels is also known as price channels which is the perfect way to determine the point you are to either buy or sell the asset you want to analyze.

_{Tradingview App}

Based on what we have talked about so far, it means trendline channels are a technical analysis tool that is used to determine a good entry point in the crypto market.

In a trend channel, the resistance level is the upper trendline, whereas the lower trendline is the support level which both areas of the trend channel provide you with the area that is going to be the support or resistance level.

A negative slop trend channel is known as a bearish trend whereas a positive slop trend channel is known as a bullish trend

---

How to draw a Trend Channels

Note that we have the ascending which is the up channel and the descending which is the down channel which for you to create.

_{Tradingview App}

The ascending channel which is up, you will have to draw a parallel line as an uptrend line at the same angle and then move (drack) the line to a position where the price has touched the recent peaks which you are do immediately you have to create your trendline.

_{Tradingview App}

The descending channel is the down channel for you to create you will have to draw a parallel line as a downtrend line at the same angle and move (drack) the line to a position where the price has touched the recent valley, which you have to do immediately you have to create your trendline.

Note:

• When you see that the price of the asset has hit the lower trendline, you can place a buy order.

• When you see that the price of the asset has hit the upper trendline, you can place a sell order.

---

Types

Based on what we have shared so far, which main looking at the screenshots you will see that trend channels are of three different types.

• The ascending channel

• The descending channel

• The horizontal channel

The ascending channel is the channel where you will see a movement of higher highs and higher lows in the chart.

The descending channel is the channel where you will see lower highs and lower lows.

The horizontal channel is the channel where you will see the market ranging back and forth movement.

---

Conclusion

_{When it comes to trading the financial markets, trend channels are very important to draw when as it is the easiest way you can be able to know where you are to place a buy or sell order. Note; this post is only created as educational material and not investment advice or trading signals.}

Reference
Reference