2. Channel

A channel forms when price moves in a sloped, parallel range—either upward or downward—creating two trendlines (support & resistance).

Bullish Channel: Higher highs and higher lows.

Bearish Channel: Lower highs and lower lows.

Traders buy near support and sell near resistance within the channel or trade breakouts.

Pro Tip: Channels often form after a spike—price calms and begins to trend.