Channels : school of Pipsology

Beginner Questions
1

Hi guys.

I’m newly enrolled in the school of pipsology. I have a query regarding the explanation of channels

_To create an up (ascending) channel, simply draw a parallel line at the same angle as an uptrend line and then move that line to position where it touches the most recent peak. This should be done at the same time you create the trend line.

To create a down (descending) channel, simply draw a parallel line at the same angle as the downtrend line and then move that line to a position where it touches the most recent valley. This should be done at the same time you create the trend line.
When prices hit the LOWER trend line, this may be used as a buying area.

When prices hit the UPPER trend line, this may be used as a selling area."

I’m confused because I would think when prices hit the UPPER trend line, it could be used as a BUYING area and when prices hit the LOWER trend line, it could be used as a SELLING area.

Please help clarify my misconception

Many Thanks

Gilga

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2

“Hit” maybe not.

“Breach”, perhaps, yes.

And “breach, retest and reject” definitely.

What it says in the lesson isn’t clearly worded and many people will have the same confusion as you.

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3

Channels are diagonal support & resistance(at least in theory). Upper channel as resistance & lower channel as support. In uptrend channel, when price retreated to lower channel line, it may be time to go long but if the price hit upper channel it may not be time to go short as one should not go against the trend. The reverse should be true for downtrend channel.:slight_smile:

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