Simple Trendline Channels
A stock that is in a channel has a price that is moving between two trendlines, either in an uptrend, downtrend, or sideways pattern. The top and bottom trendline of a channel acts as support and resistance.
Look for a solid break of a downtrend channel to reverse long and a solid break of an uptrend channel to reverse short. Sideways channels can break in either direction, but will often break in the direction of the prevailing trend.
The following is a downtrend channel on Best Buy. Notice how the trendlines act as support and resistance for price. Look for downtrend channels for a solid break long to reverse trend.
