Horizontal Channel
Two parallel horizontal trendlines acting as very strong support and resistance. The upper trendline connects a stock's highs over a period of time, and each high is equal to the previous high. Similarly, the lower trendline connects the stock's lows, and each low is also equal to the previous.
Investopedia Says:
Once the price of a stock breaks out of the upper or lower part of a horizontal channel, a large price movement in the direction of the break usually follows. Once through the upper area of resistance, this level will now become support. Horizontal channels are mainly used in range-bound trading, where the investor will buy the stock at the bottom of the channel and sell it near the top. Related Terms:
Ascending Channel
Breakout
Channel
Descending Channel
Range-Bound Trading
Resistance
Support
Trendline |