headymuk

WHAT IS A CHANNEL PATTERN ?

Education
NSE:INDIGO   INTERGLOBE AVIATIO
CHANNEL PATTERN :- It is nothing but a formation of two almost parallel lines between which the stock oscillates.
Channel can be of 3 types : 1) Horizontal Channel 2) Rising Channel 3) Falling Channel

It is a constant fight between bears and the bulls and victory is decided by the breakout or breakdown of the channel pattern.
Bulls wins the fight if breakout occurs , bears wins the fight if breakdown occurs.
When fight is over, the stop loss of other team is hit hence we can see a very strong move after the breakout or a breakdown.
I have explained everything on the chart itself but here is one tricky point which i would like to again repeat. :-
When a stock fails to touch the either of the line , there is a possible chance of breakout on the opposite side. ( as clearly seen in the chart breakout took place on above side when stock didn't touched the support line )
In above scenario bulls were more strong as they didn't let the stock move towards the support line, bears lose hope and finally breakout took place.

Another secret point i would like to share with you all :-
When stock gives a fakeout (breakout + moving back into the channel ) there is a possible chance of breakdown on the opposite side.
and When stock gives a fakedown (breakdown + moving back into the channel ) there is a possible chance of breakout on the opposite side.

I have shared many channel pattern stocks in my previous analysis , feel free to watch them for better understanding.

Comments

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Good clear chart and idea with good clear explanation.
200 coins
+2 Reply
headymuk AngusMcK
@AngusMcK, Thanks for motivating to do more !
+3 Reply
PS - I just saw your comments below about Hindustan Unilever..Looks like we are thinking on the same page..Cheers
+4 Reply
headymuk tksthathachari
@tksthathachari, Cheers !
Reply
Brilliant explanation! Would work wonders for newbies like me. :)
+2 Reply
headymuk mayankbandral
@mayankbandral, thanks alot !!
+1 Reply
The same happened in Hindustan Unilever. I have observed this pattern few times and arrived at the same conclusion that - if it doesn't touch one side, then it is going to break the other side..But I was at doubt..Thank you for the confirmation.
+2 Reply
headymuk tksthathachari
@tksthathachari, Yes , Nice observation.
Reply
Great chart articulation. Keep it up and thanks.
+1 Reply
headymuk raviparam
@raviparam, Thanks for kind words
Reply