Streams or Channels: Connecting at least two highs (this is to obtain the Line of the Upper Trend) and at least two lows (this is to get the Line of the Lower Trend) will result in one of three patterns outlined below:
Channel Ascending: Higher highs and higher lows are expected in an ascending channel (as shown below).
The down arrows determine highs, and lows are determined by the up arrows. We get a channel when the line connecting the highs and the line connecting the lows are nearly parallel. We will wait for a while before taking any positions to ensure that the price remains within the channel. By simply looking at the chart, it is clear that the channel is ascending, as the price made some higher quite highs and some higher low. When forming the channel, be cautious when selecting the highs and lows. Price action/channel trading isn’t a precise science. Minor deviations can be overlooked. If there isn’t a clear channel visible, don’t trade.
Diverse Markets: It’s simple to spot a market that’s on the rise. There is directionality, and the price is moving in one of two directions: up or down. We are making higher highs and higher lows in an uptrend. We are making lower highs and lower lows in a downtrend. This is simple, and we believe everyone watching this course already knows it. There is no directionality in a ranging market. The price is reduced in a particular range. There is an unbroken support area and an unbroken resistance area, and prices are just bouncing off these two levels, forming what is known as a range.