Horizontal Channel

AAA

DEFINITION of 'Horizontal Channel'

Using trendlines to connect variable pivot highs and lows shows price contained between the upper line of resistance and lower line of support. This is price range or sideways trend. This horizontal channel or sideways trend is also a rectangle pattern (dotted lines show the pattern). Buying and selling pressure is equal and the prevailing direction of price sideways. This happens in periods of price consolidation.

INVESTOPEDIA EXPLAINS 'Horizontal Channel'

Price is framed out in a trading range by the pivot highs (resistance) and pivot lows (support). Trendlines drawn on pivots give a visual picture of price action. A new high in price above the horizontal channel is a technical buy signal. A new low in price below the horizontal channel (or rectangle pattern) is a technical sell signal.

RELATED TERMS
  1. Ascending Channel

    An ascending channel is the price action contained between upward ...
  2. Descending Channel

    A descending channel or downtrend is the price action contained ...
  3. Range-Bound Trading

    A trading strategy that identifies stocks trading in channels. ...
  4. Channel

    1. The system of intermediaries between the producers, suppliers, ...
  5. Resistance (Resistance Level)

    A chart point or range that caps an increase in the level of ...
  6. Breakout

    A price movement through an identified level of support or resistance, ...
Related Articles
  1. Channeling: Charting A Path To Success
    Charts & Patterns

    Channeling: Charting A Path To Success

  2. Speed Resistance Lines
    Active Trading Fundamentals

    Speed Resistance Lines

  3. Forex: Should You Be Trading Trend Or ...
    Forex Education

    Forex: Should You Be Trading Trend Or ...

  4. Forex: Identifying Trending And Range-Bound ...
    Forex Education

    Forex: Identifying Trending And Range-Bound ...

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center