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Trend Channel

A trend channel places two boundaries around a market’s price movement. In an uptrend, one line may connect rising lows while a roughly parallel line follows the highs. The lower boundary can show where buyers have previously returned, while the upper one marks where rallies have slowed. A downtrend channel uses the same idea in the opposite direction. The lines are drawn from past prices, so different analysts may place them slightly differently. A break outside the channel can show that the old pace of movement has changed, but it may also be temporary. The channel organises the trend rather than predicting its destination.

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