Trend

A particular trend could move up and down. We have an uptrend when each local extreme (maximum and minimum) is higher than the previous one. When there is a downtrend of course, the situation is the opposite – each local extreme is lower than the previous one. Uptrend line is drawn on the local minimum and analogically downtrend line – on the local maximum.

downtrend
Downtrend

Once we have determined the trend line in the opposite extreme, we can draw another line that is parallel to the first one. Thus we get a price channel, which is expected to continue the development of the current trend.

price channel
Price channel
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