Channel

A channel is a chart pattern formed by two roughly parallel trendlines that contain price action, with one line connecting the highs and the other connecting the lows. Channels can slope upward (ascending channel), downward (descending channel), or run flat (horizontal channel, also called a range). The lower boundary acts as support and the upper boundary as resistance, and price tends to oscillate between them until the pattern breaks.

For example, if Bitcoin repeatedly bounces between rising lows near a lower line and rising highs near an upper line — say touching $60,000, then $63,000, then $66,000 on the lows while topping out a proportional distance higher — traders would draw an ascending channel and might buy near the bottom boundary or take profits near the top.

When price closes outside a channel with conviction, traders treat it as a breakout in that direction, though breakouts against the channel's slope are watched especially closely. A common misconception is that channels are precise geometric structures; in reality price frequently pokes slightly beyond the lines, so traders treat the boundaries as zones and wait for candle closes rather than reacting to every touch.