Channels
By LawrencePart of Art of Chart Reading
Channels is an interesting structural behaviour with non-random price movements. With purely random generated data series, channels rarely show up. It is one of the most important evidence that real market data are not random.
Channels essentially are extended usage of the trend lines. The way that price is trapped within 2 parallel trend lines gives very interesting properties to the price behaviour and useful trading setups that is not possible with just the trend lines by themselves.
Channel trading is a complete methodology by itself. Many traders simply master this single method and stop using other trading setups. So do not underestimate the channel concept just because it looks so simple.
Example of A Down Channel
Following is a British Pound hourly chart.
Part of our premium service, login now or upgrade your membership to view this report
No keep writing about them! I’ve been trading as a “job” for the past 8 years and have never really gotten much out of any geometry approaches so learning from real traders about how to use any type of geometry is insightful. Thank you.
Geometry approach works because it is a quick and dirty way to approx where the uncle points are. Think about it.
Does “geometry” include Gann? (Whose work strikes me as horribly complex and suspiciously mystical…)
Gann noticed recurring geometric patterns from the charts because the rhythm of price swings back at his time was quite simple.
One main contributing factor was the availability of information was clearly limited by physical means back then. =)
Gann may have pushed the concept of geometric patterns a bit too far but it works for him and that’s all that matters.