Channel – What is a Channel in forex trading ?

What is a Channel?

Definition of Channel: A channel is explained as a straight line which is drawn in parallel to the general trend line. As far as an uptrend is concerned, the channel line starts slanting towards the right side and is generally drawn over the peaks. On the other hand, if we consider downtrend, the line is drawn under the price bottoms and starts slanting towards the right direction. Resistance is understood to be around the growing channel lines and offers support around the descending lines of channel. A break which is under or above the channel indicates a change in the existing trend. The Forex traders very well know that a breakout strategy is the best trading plans that can give rise to danger. The breakout takes place when the market burst suddenly in a specific direction after the consolidation. This burst gives a chance for a decent gain.