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    What Is A Channel?: Key Takeaways

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    Ali Abdelfatah Mahmoud
    A channel refers to either a distribution system for businesses or a trading range between support and resistance levels on a price chart. Specifically, a distribution channel describes how a product moves from producer to consumer through intermediaries, while a price channel graphically depicts the peaks and troughs of a security's price movement within consistent highs and lows over time. Price channels can be used for technical analysis, with upward or downward breaks from the channel lines seen as bullish or bearish signals respectively.

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    What Is A Channel?: Key Takeaways

    Uploaded by

    Ali Abdelfatah Mahmoud
    46 views2 pages
    A channel refers to either a distribution system for businesses or a trading range between support and resistance levels on a price chart. Specifically, a distribution channel describes how a product moves from producer to consumer through intermediaries, while a price channel graphically depicts the peaks and troughs of a security's price movement within consistent highs and lows over time. Price channels can be used for technical analysis, with upward or downward breaks from the channel lines seen as bullish or bearish signals respectively.

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    A channel refers to either a distribution system for businesses or a trading range between support and resistance levels on a price chart. Specifically, a distribution channel describes how a product moves from producer to consumer through intermediaries, while a price channel graphically depicts the peaks and troughs of a security's price movement within consistent highs and lows over time. Price channels can be used for technical analysis, with upward or downward breaks from the channel lines seen as bullish or bearish signals respectively.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    46 views2 pages

    What Is A Channel?: Key Takeaways

    Uploaded by

    Ali Abdelfatah Mahmoud
    A channel refers to either a distribution system for businesses or a trading range between support and resistance levels on a price chart. Specifically, a distribution channel describes how a product moves from producer to consumer through intermediaries, while a price channel graphically depicts the peaks and troughs of a security's price movement within consistent highs and lows over time. Price channels can be used for technical analysis, with upward or downward breaks from the channel lines seen as bullish or bearish signals respectively.

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    What Is a Channel?

    A channel may refer to a distribution system for businesses or a trading range between support and
    resistance on a price chart.

    KEY TAKEAWAYS
     A channel may refer to a distribution system for businesses or a trading range between support and
    resistance on a price chart.
     Distribution channels describe the method by which a product moves from producer to consumer.
     A price channel is a chart pattern that graphically depicts the peaks and troughs of a security's
    price over a period of time.

    Understanding a Channel
    A channel in finance and economics can either mean a:

     Distribution channel, which is a system of intermediaries between the producers, suppliers,


    consumers, etc., for the movement of a good or service.
     Price channel, which is a trading range between support and resistance levels that a security's
    price has oscillated within for a specific period of time.

    Price Channels
    A price channel is a chart pattern that graphically depicts the peaks and troughs of a security's price over a
    period of time. If there is an observable symmetry in the oscillation, then it is considered to be a valid price
    channel that can be used as a tool for stock analysis. Market technicians suggest that at least four points of
    contact are required (two each for the upper and lower lines). Price channels can move either upwards,
    downwards, or stay flat, but the two lines must be approximately parallel.
    If a stock is fluctuating between consistent highs and lows, a trader can use a channel to predict price peaks
    and troughs. For example, a trader could buy a stock when the price touches the lower channel line and set
    a profit target at the upper channel line. 
    Using channels is best suited for moderately volatile stocks that experience regular oscillations. Traders
    consider an upward breakout from a channel as bullish and a downward breakout as bearish. Temporary
    price spikes above and below a price channel are common, therefore, other indicators should be used to
    confirm a breakout. Channels lose their relevance as a predictive indicator when prices breakout from the
    pattern.

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