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.
Brilliant explanation! Would work wonders for newbies like me. :)
headymuk
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@mayankbandral, thanks alot !!
tksthathachari
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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.
Sir How much move expected in long side ? What is the 1st target can you please suggest ?
headymuk
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@jyotyrocks Target is generally the channel width (distance between support and resistance line ). But I suggest you to book profit slightly before that.
Thank you for your valuable contribution to the TradingView community and keep up the good work!
Good clear chart and idea with good clear explanation.