When a stock is trading in a channel… is it better to wait until the channel breaks or play it off the bounce of support and resistance?
★ SUMMARY ★
Let’s take a look at what is a channel. A channel is typically when a stock is moving in a tighter range pattern than normal. Think of this like a stream, a channel of a river, so it’s tighter, it’s smaller, it’s a smaller pattern range than what the river normally flows.
There are typically three types of channels you have a sideways channel, you have an upward channel, and you also have downward channels
How a stock moves in a channel?
How does the stock move within this channel? Typically you will have a stock move from the downside, or from the upside region, depending on where it’s coming from.
The question really comes down to, is it better to trade within that channel? Or is it better to go ahead and trade once that channel breaks?
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