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. Breakout

    A price movement through an identified level of support or resistance, ...
  2. Support (Support Level)

    The price level which, historically, a stock has had difficulty ...
  3. Trendline

    A line that is drawn over pivot highs or under pivot lows to ...
  4. Resistance (Resistance Level)

    A chart point or range that caps an increase in the level of ...
  5. Channel

    1. The system of intermediaries between the producers, suppliers, ...
  6. Range-Bound Trading

    A trading strategy that identifies stocks trading in channels. ...
Related Articles
  1. Charts & Patterns

    Channeling: Charting A Path To Success

    Find out how to build these charts showing buy, sell, stop-loss and take-profit points, and even estimate length of trade.
  2. Active Trading Fundamentals

    Speed Resistance Lines

    Learn how to measure the uptrend and downtrend lines on a finance chart.
  3. Forex Education

    Forex: Should You Be Trading Trend Or Range?

    In FX, it's not the price environment that decides this for you. Learn the differences to see which you prefer.
  4. Forex Education

    Forex: Identifying Trending And Range-Bound Currencies

    Gain a trading edge by learning how macroeconomic forces play out differently for various pairs in the forex market.
  5. Chart Advisor

    Four Stock Market Swing Trade Ideas

    These four stocks are bouncing off support/resistance, or ready to break though, providing swing trading opportunities.
  6. Trading Strategies

    Risk Management Techniques For Shorting Call Options

    Shorting covered calls is a popular options trade strategy. Here are the methods to mitigate the risk/loss and enhance profits for selling covered calls
  7. Chart Advisor

    Use This ETF To Trade The Swiss Franc

    Traders were stunned last week when the Swiss National Bank removed the currency peg that tied the value of the Swiss franc to the euro.
  8. Trading Strategies

    Day's First Trade Can Serve As Support/Resistance

    The first trade of the day in liquid markets defines a narrow price level that can act as support or resistance for the entire session.
  9. Chart Advisor

    3 Energy Related Stocks Poised For A Pop

    A sharp decline in energy prices have created an interested opportunity in several oil-and-gas related companies. Given the strong downtrends apparent on the charts, most traders would use recent ...
  10. Chart Advisor

    Do Good Buys Remain Among Beaten-Down Financials?

    The financial sector performed the worst last month (besides energy, of course). Here's a look at some financial stocks that have bucked that trend.

You May Also Like

Hot Definitions
  1. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  2. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  3. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  4. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  5. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  6. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
Trading Center