WHAT IS A CHANNEL PATTERN ?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.
