Trend lines and Channels

Trend Lines

Trend lines, always drawn from left to right can give you useful information about support and resistance. They can be drawn upwards, downwards or sideways.

How to use trend lines

In their most basic form, an uptrend line is drawn along the bottom of easily identifiable support areas (valleys). In a downtrend, the trend line is drawn along the top of easily identifiable resistance areas (peaks).

Line of support - A trend line connecting a set of support levels

Line of resistance - A trend line connecting resistance levels

Research has also shown that the more significant trends form at 45-degree angles. A sharper angle suggests an unsustainable rally and a shallower angle suggests that a trend may be close to reversal

Warning: Do not try to force a trend line fit into what you believe could be the direction. Its will result in incorrect price prediction.


Channels are formed by drawing support levels in an upward trend and the resistance levels in a downward trend. If the price of the currency pair continues to fluctuate between these two trend lines then you can consider it a valid channel.

The channel is among the most useful analytical forex tools in pattern identification. Unlike the breaking of a trend line, which signifies a possible reversal in the trend, the penetration of the channel line is an indication of expected acceleration of a trend that's already in motion. On the corollary, a failure to reach the channel line on the other hand is an indication that the trend is failing and that price may break through the trend line on its next turn.

Forex Educational Articles & News

Top 5 factors that affect exchange rates ...

There are many factors that affect exchange rates of currencies. However some are more important in currency trading than others. These are; Interest and Inflation rates, Trade balance, Currency market speculation, Foreign investment and Central bank market intervention. Learn how to use these factors in your forex tra ...

Forex Navigation