A horizontal channel is a pattern that underlines investor’s indecisiveness. This horizontal channel is assembled by two horizontal and parallel lines that build the progress of the price. To confirm a line, there should be at least two points of contact with the price. The more contact points it will has, the more these will be durable and their breakout will give an substantial buy/sell signal.
The horizontal channel is a familiar chart pattern. It’s found on every time frame. Central to this channel, buying and selling forces are alike and only the breakout of one of the two bands will show an advantage to one of them.
The abstract objective of the pattern will be calculated by extending the length of the channel on the break point.
Check the graphical representation of a horizontal channel:
The goal price of this pattern is ascertained by its height from the base of the triangle that’s carried over the break point. Try the technique to draw a parallel line to the support of the symmetrical triangle from the first contact point with the resistance which will help obtain a bullish target price.
The more the horizontal channel is long, the more the movement at the exit will remain strong.
Pullbacks are usual. The breakout will often occur at the 4th contact point.
Financial Times
Comparative Economic Systems
