Trading Price Action Trends by Al Brooks

Author:Al Brooks
Language: eng
Format: epub
ISBN: 9781118166253
Publisher: Wiley
Published: 2011-10-27T16:00:00+00:00

A trend channel line points in the direction of the trend but is on the opposite side of the trend from the trend line. Extend it to the right and watch how the price acts when it penetrates the channel line. Does it reverse or does the trend accelerate, ignoring the line?

Trend channel lines are commonly drawn in one of two ways. The first way is to draw it as a parallel line (dashed lines in Figure 14.1) of a trend line (solid lines), drag it to the opposite side of the action, and place it to touch a swing point located between the two bars used to create the trend line. Choose the point that will result in all of the bars between the trend and channel lines being contained between the lines. The second type (dotted lines in Figure 14.1) of a trend channel line is drawn across swing points and is independent of any trend line. You can also simply draw a best fit, but these are usually not helpful in trading.

Figure 14.2 Slope of the Final Flag

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