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.


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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