Ranging price Channels are also referred as Trend Channels. These channels are one of the most actively and widely used tool of technical analysis along with fibonacci and retracement levels. These channels show the buying and the selling zones of a certain currency in Forex Trading. But like all other tools of technical analysis you cannot blindly follow their results. You need to thoroughly observe the current situation of market. You also need to pay attention to probability of profit of a trade opportunity. After analyzing the financial market and trade, if the results of the analysis of the Price Channels and trend lines match with your requirements then decide accordingly.
Kinds of Price Channels:
There are three kinds of Price Channels. These are
- Ascending Price Channels
- Descending Price Channels
- Ranging Price Channels
Ascending channels are also referred as ‘Rising Channels’. They reflect the higher levels of tops. Similarly they also reflect the higher lows as well.
Descending Channels are also known as ‘Falling Channels’ in Forex Trade. They show the Lower lows of the trading currency. At the same time, they reflect the lower tops of the trade as well.
Ranging Price Channels:
Ranging Price Channels are also known as ‘Horizontal Price Channels’. As the name suggests, these channels reflect the changing Horizontal situation of the trade.
Zones of the Price Channels:
The bottom and the top of the Price Channels represent the beneficial buying and selling zones of a currency.
The highest points or top or peak of a Price channel shows the suitable and beneficial selling zone. It represents the price is going to change oddly. Thus you should sell the currency to earn profit and/or avoid loss.
The bottom or the lowest point of the Price channel shows the buying zone for traders. You should buy the currency at that time to earn profit.