A trading channel is the distance between two "almost" parallel lines that shows the trading range between the support areas and the dynamic resistance of a financial instrument on a price chart. This visual depiction shows the patterns that form in price charts, and are very useful for technical analysis. If there is a visible repetition in price fluctuation, the channel in question is valid, and can be used as an effective tool to analyze the price of the financial instrument. Price channels are best used for financial instruments, such as stocks, which are moderately volatile and experience regular swings.
