A trend-following pattern where price moves within two parallel upward-sloping trendlines, acting as dynamic support and resistance. This pattern indicates an orderly and sustained uptrend, where pullbacks provide buying opportunities within a defined structure.
Significance
- Indicates a steady uptrend with well-defined support and resistance levels.
- Frequently appears in bullish markets, signalling a continuation of the trend.
- A breakout above the upper trendline confirms strong bullish momentum.
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Characteristics
- Parallel rising trendlines, forming a price channel.
- The lower trendline acts as support, and the upper trendline acts as resistance.
- Breakout above the channel signals a sharp bullish move.
Market Condition
- Found in strongly trending markets, particularly growth stocks and indices.
- Best used in momentum trading and swing trading strategies.
Trading Strategy
- Entry Point: Buy near the lower trendline or on a breakout above the upper trendline.
- Stop-loss: Below the lower trendline.
- Target Price: Measure the channel width and add it to the breakout level.