Channel (Technical Formation)

A channel, in the realm of technical analysis (TA), denotes a charting pattern characterized by an asset’s trading activity within two trendlines—an upper and a lower trendline. Channels usually form when an asset’s price remains confined between a resistance level it fails to breach and a support level it avoids dropping below. Ascending channels and descending channels are among the different types of channels that can manifest. Traders often employ channels in conjunction with various other TA indicators to identify potential buying and selling opportunities at specific price levels.