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Price Action

What Is a Price Channel

A price channel is a trend line and a parallel copy of it, with the price running between the two. This paper shows you a real rising channel drawn from three lows and two highs of the euro in May and June 2025, how a channel is made in three steps, the channel on the daily chart with its touches and the close that left it, what its width means, and the channel tool on your platform.

Difficulty
Intermediate
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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Two rails

A price channel is a trend line and a parallel copy of it, with the price running between the two. The euro against the dollar made lows on 12 May, 29 May and 19 June 2025 that sit on one rising line. A parallel line through the highs of 26 May and 12 June sits 264 pips above it — a pip being the fourth decimal place, the smallest step most people count in. For seven weeks the price climbed between the two rails, touching the floor three times and the ceiling twice.

How it is made

A channel is drawn in three steps. Draw the trend line through two or three lows of a rise. Copy it and move the copy up, keeping the same slope, until it touches a high. Run both lines on to the right. The slope comes from the lows and the width from the highs. A falling channel is the same three steps the other way up: the line through the highs, and the copy moved down until it touches the lows.

This paper is locked

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