WEBVTT

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How to draw a channel? We are on Dollar - Japanese yen, it is a weekly chart and the first thing that we

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can notice is that the price is going slowly down and we are currently in a downtrend.

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What we will normally do in this situation is to draw a downtrend line to connect lower highs.

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So I draw my line here connecting these two highs.

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Now when you draw a trend line, sometimes you have a feeling that on the other side the you can draw

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exactly the same line to connect some important points. In this case, we are in a downtrend,

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I drew a trend line to connect lower highs, but I immediately have a feeling that I can draw the same

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line to connect lower lows on the opposite side.

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In this case, instead of having a trend line, that I'm deleting, you can click on this button here and it

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will draw a channel.

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Let's start by drawing the same trend line. I'm drawing exactly the same trend line that I had before.

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Now we have another line here that is parallel to our trend line. With this line,

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we can try to connect lower lows as well.

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So we will have something like that.

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You can try to place it on one of the lows, here for example, but it doesn't look very nice.

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Let's try here...

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it looks much better.

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We can try with this other low and it looks perfect,

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so I will keep it like that.

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There is no general rule to build a channel.

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You just need to develop an eye for it, with practice.

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Also, sometimes you can draw a very good trend line but you can't build a good channel because the situation

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on the opposite side is different

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and a parallel line would not make any sense.