Chart Pattern Recognition Series - Price Channel (Technorati) Technorati | (Del.icio.us) Del.icio.us | (Digg) Digg | (Blinklist) Blinklist | (Comment) Comments (1)

The price channel pattern is one of the simplest, easy to recognize chart patterns I use. This continuation pattern slopes up (bullish) or down (bearish) while bouncing off the upper and lower trend lines. The upper trend line marks resistance and the lower trend line marks support. What I really like about this pattern is that it can be traded a variety of different ways. You could trade it short term, buying on the bottom trend line support and selling at resistance or you could also "buy and hold" the pattern. Regardless of which you choose, a key point you want to remember is to buy on specific injection points, or points where the price touches the bounding support and resistance levels. Price channels will not last forever, but the underlying trend remains in place until proved otherwise.

If the pattern is of a bullish tilt, look to buy the stock on its support level. On the other hand, if the stock is of a bearish tilt, look to short the stock at its resistance level. I would recommend against trying to catch the brief upticks of bearish price channels or shorting the pullbacks of bullish price channels. Going against the trend is usually not a good idea. I am sure you have the phrase "The Trend is Your Friend" before right? That phrase is true when trading attempting to trade this pattern. It is a very simple pattern to recognize and one that could make you some easy money. Let me know if you find any!

1 Comments - Post your comment below.

Nov. 16, 2007

Is this software compatible wilth Sensex or NSE , Indian exchanges

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