Price channel

A price channel is a pair of parallel lines drawn on a chart, one along a run of highs and the other along the corresponding lows, used to describe movement that has so far stayed between them. It is a drawing rather than a calculation: the reader chooses which points the first line touches, and the second line is placed parallel to it at whatever distance is needed to reach the opposite extremes. Because both lines are chosen, a channel summarises the past rather than marking a boundary price is under any obligation to respect, and different readers will draw different channels on the same stretch. Channels drawn this way are also distinct from the bands some indicators produce, which are computed from price by a formula and move as new data arrives; a drawn channel stays where it was put until someone moves it. The two are often displayed together and are easy to confuse on a crowded chart, which matters because only one of them updates itself.