Trendline Channel Type
The Trendline Channel is one of the tools that can be used to perform technical analysis. This analysis tool is an extension of the trendline that we have previously studied. The use of the channel itself is divided into three parts according to the ongoing trend.
Upper Channel
The channel is one of the tools in conducting analysis, which is the development of the trendline. How to draw it is also quite simple; you just have to duplicate the trendline that you have created.
The first step is to draw a trend line in accordance with the direction of the trend. For example, in the picture below, you draw a trendline during an uptrend.
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| Up Channel |
Then, draw a line parallel to the trendline. This second line is "projected" so that it connects the vertices.
As with the trendline, this line must connect at least two peaks. Become an Up Channel, or often referred to as an Ascending Channel.
Simple, right?
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| As with the trendline, this line must connect at least two peaks |
Down Channel
Meanwhile, to draw a down channel, or what is often referred to as a descending channel, is as simple as drawing a bullish channel.
First, first draw a trendline that connects at least two peaks. Then draw a line parallel to the trend line connecting at least two valleys.
Below is an example of a down channel.
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| An example of a down channel |
Although simple, this channel is very useful and can be used to estimate buying or selling areas. The two channel lines function as support and resistance. The line above works as resistance, while the line below works as support.
To make it easier to pronounce, let's call the two lines a support line and a resistance line. When the price is in the support line area, then you can try to find confirmation in the form of a bullish signal to buy, with the target at the resistance line.
Beware if the price breaks below the support line. If that happens, it's a good idea to consider releasing and closing the transaction. Of course, this will also have to look at the development of the market situation.
We will discuss this later, in a more advanced topic. Stay tuned for this educational module.
Likewise, when the price is in the resistance line area, At that time, you can try to find a bearish signal confirmation to sell with the target at the support line. Of course, you have to be careful if the resistance line breaks after you sell.
Sideways Channel
There are times when the price moves sideways, so you can't draw the up channel or down channel well. In this situation, we can draw a horizontal channel. We call a channel like this a side channel or a start channel.
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| An example of a Sideways Channel |
Below is an example chart that presents the three channel types we have discussed, namely up channel, down channel, and sideways channel.
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| An example chart that presents the three channel types |
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