Pathshala: Types of channels 7/A

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Channels</h1>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">If we take this trend line theory one step further and draw a parallel line at the same angle of the uptrend or downtrend, we will have created a channel. No, we're not talking about ESPN, ABC, or Cartoon Network.</span><span style="font-family: "arial" , "helvetica" , sans-serif;"></span><span style="font-family: "arial" , "helvetica" , sans-serif;"> Still, this doesn't mean that you should walk away like it's a commercial break- channels can be just as exciting to watch as America's Next Top Model or Entourage! </span>

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<span style="font-family: "arial" , "helvetica" , sans-serif;">Channels are just another tool in technical analysis which can be used to determine good places to buy or sell. Both the tops and bottoms of channels represent potential areas of support or resistance.</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">To create an up (ascending) channel, simply draw a parallel line at the same angle as an uptrend line and then move that line to position where it touches the most recent peak. This should be done at the same time you create the trend line.</span><span style="font-family: "arial" , "helvetica" , sans-serif;"></span><span style="font-family: "arial" , "helvetica" , sans-serif;"> To create a down (descending) channel, simply draw a parallel line at the same angle as the downtrend line and then move that line to a position where it touches the most recent valley. This should be done at the same time you create the trend line.</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> When prices hit the bottom trend line, this may be used as a buying area. When prices hit the upper trend line, this may be used as a selling area. </span>

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Types of channels</h2>
<b><span style="font-family: "arial" , "helvetica" , sans-serif;">There are three types of channels:</span></b><br />
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<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Ascending channel (higher highs and higher lows)</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Descending channel (lower highers and lower lows)</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Horizontal channel (ranging)</span></b></li>
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Important things to remember about trend lines:</h2>
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<li><span style="font-family: "arial" , "helvetica" , sans-serif;">When constructing a channel, both trend lines must be parallel to each other. </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Generally, the bottom of channel is considered a buy zone while the top of channel is considered a sell zone.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Like in drawing trend lines, <b>DO NOT EVER</b> force the price to the channels that you draw! A channel boundary that is sloping at one angle while the corresponding channel boundary is sloping at another is not correct and could lead to bad trades.</span></li>
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Channels If we take this trend line theory one step further and draw a parallel line at the same angle of the uptrend or downtrend, we...