Trading Channel

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DEFINITION

When charting the price of an asset, this is the space on the chart between an asset's support and resistance levels. The price of the asset will stay within the support and resistance levels until a breakout occurs.

INVESTOPEDIA EXPLAINS

Range traders will buy an asset when its price is near the bottom of the trading channel and sell it when the price gets close to the top of the trading channel, making a profit on the price spread. Trading channels may be flat, ascending or descending.


RELATED TERMS
  1. Range

    A stock's low and high prices for a particular trading period, such as the close ...
  2. Range-Bound Trading

    A trading strategy that identifies stocks trading in channels. By finding major ...
  3. Channel

    1. The system of intermediaries between the producers, suppliers, consumers, ...
  4. Chartist

    An individual who uses charts or graphs of a security's historical prices or ...
  5. Technical Analysis

    A method of evaluating securities by analyzing statistics generated by market ...
  6. Trading Range

    The spread between the high and low prices traded during a period of time.
  7. Resistance (Resistance Level)

    A chart point or range that caps an increase in the level of a stock or index ...
  8. Breakout

    A price movement through an identified level of support or resistance, which ...
  9. Spread

    1. The difference between the bid and the ask price of a security or asset. ...
  10. Support (Support Level)

    The price level which, historically, a stock has had difficulty falling below. ...
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