A corridor where price oscillates between a trendline and a parallel return line. Fading the rails and trading the breakout are two different strategies built on the same two lines.
A price channel is a corridor that frames price between a trendline and a parallel return line.
One line connects the lows. Another connects the highs. When these two run roughly parallel, price travels diagonally inside them, bouncing back and forth as it advances. An upward slope is an ascending channel, a downward slope is a descending channel, and a roughly flat one is a horizontal channel, which is effectively a rectangle.
What separates a channel from an ordinary trendline is that there are two lines.
A trendline only gives you a single line of support. A channel adds a second line, mapping not just where price is supported but how far it gets pushed back and where it has gone too far. It boxes in not only the direction of the trend but the width of the swing inside it.
And those two lines create two distinct uses. Fading the swings inside the lines, and riding the breakout the moment price escapes them. One shape contains two opposite strategies at the same time.
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