The horizontal channel is a neutral chart pattern that marks the indecision of investors. Buyers and sellers fight, and it is only when they leave the horizontal channel that they agree on a meaning. Either buyers pass sellers or sellers pass buyers. Hence the strong power of the movement at the exit of the horizontal channel.
The horizontal channel does not allow you to anticipate the orientation of the next movement. It is only when exiting a horizontal channel that investors are fixed (Bullish if exit from the top; Bearish if exit from the bottom).
The horizontal channel can be seen as a continuation figure.
The horizontal channel is formed by two parallel horizontal straight lines which frame the evolution of the price.
The upper line is called the “resistance line”. The lower line is called the “support line”.
The horizontal channel is a frequent chartist figure that can be found on all time units.
Notes and Statistics: #
- The longer the horizontal channel, the more powerful the output movement will be.
- The course frequently performs a pullback on the channel after exit.
- The exit is often made at the 4th point of contact after one of the lines of the horizontal channel.