There are three types of channels in Forex charting: ascending channel, descending channel, and horizontal channel.
In an ascending channel pattern, the peaks create higher highs and higher lows.
In a descending channel pattern, the peaks create lower highs and lower lows. And, in a horizontal channel pattern, the market is ranging.
- Traders buy near the channel bottom and sell near the channel top.
- Traders take short trades whenever the price touches the upper boundary and take long trades at the lower boundary.
- You can also use the break out of a channel to find trades.