Trading Channel

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DEFINITION of 'Trading Channel'

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 'Trading Channel'

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, ...
  2. Resistance (Resistance Level)

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

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

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

    The price level which, historically, a stock has had difficulty ...
  6. Range-Bound Trading

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