Descending Channel

A descending channel or downtrend is the price action contained between two downward sloping parallel lines. Lower pivot highs and lower pivot lows are a bearish signal. In a downtrend, a trade might be entered at the trendline and exited at the channel line. A lower low below a descending channel can signal continuation. A higher high above the low of an ascending channel can signal trend change.

Price channels show trend direction. The slope of the channel shows momentum. Here is a simple technical edge: start the down trendline using two lower pivot highs and stay short below the trendline.


Investment dictionary. . 2012.

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