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. 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. Breakout

    A price movement through an identified level of support or resistance, ...
  6. Channel

    1. The system of intermediaries between the producers, suppliers, ...
RELATED FAQS
  1. How can I spot trading opportunities looking at year-to-date (YTD) performance?

    Trading opportunities on the long side can be spotted by looking at stocks with the worst year-to-date (YTD) performance, ... Read Full Answer >>
  2. How does Net Operating Profit After Tax give a clearer view of the operating efficiency ...

    Net operating profit after tax (NOPAT) gives a clearer view of the operating efficiency of a company. While NOPAT is a measure ... Read Full Answer >>
  3. Which is better: dollar cost averaging or value averaging?

    Historical comparisons seem to indicate that value averaging (VA) tends to outperform dollar cost averaging (DCA), offering ... Read Full Answer >>
  4. Why is the Nasdaq more volatile than the NYSE?

    The Nasdaq exchange does tend to regularly evidence more volatility than its major competitor, the New York Stock Exchange ... Read Full Answer >>
  5. How can I use Bollinger Bands® to spot options trading opportunities?

    Traders can use Bollinger Bands in a couple of different types of trading strategies. The most common strategy is using Bollinger ... Read Full Answer >>
  6. How do prepaid expenses affect liquidity ratio calculations?

    Prepaid expenses generally increase the value of liquidity ratios because a prepaid expense is categorized as a current asset ... Read Full Answer >>
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

    Stocks Breaking to Downside - Time to Sell?

    These stocks have broken patterns or trendlines to downside, indicating more selling could be coming.
  6. Chart Advisor

    3 Ways To Trade The Bounce In Coal

    News from the Supreme Court has caused active traders to turn their attention to the coal markets. We'll take a look at how to trade the bounce.
  7. Chart Advisor

    How Investors are Profiting from Cyber Crime Fear

    An ETF that has seen significant gains this year in the growing field of cyber security, and the threat and fear of cyber attacks and cyber crime.
  8. Chart Advisor

    Buy These Stocks on The Pullback

    These four stocks are in upward sloping trend channels and have recently pulled back toward the bottom of the channel, providing a buying opportunity.
  9. Technical Indicators

    Using Bullish Candlestick Patterns To Buy Stocks

    These five popular candlestick chart patterns signal a bullish reversal in downtrend.
  10. Chart Advisor

    3 Ways To Trade Oil's Move Lower

    The spot price of oil is facing major resistance. We'll take a look at a few products that you can see to profit from the move.

You May Also Like

Hot Definitions
  1. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
  2. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  3. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  4. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  5. Current Account Deficit

    A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services ...
  6. International Monetary Fund - IMF

    An international organization created for the purpose of: 1. Promoting global monetary and exchange stability. 2. Facilitating ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!