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Ascending Trend Channel

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Ascending Trend Channel

If connecting the price tops of a particular stock or index compose an upward-sloping line parallel to a line connecting the bottoms of that stock or index, the Ascending Trend Channel is the area between the two lines.

This ascending trend channel was drawn on a 60-minute chart of Applied Materials. Each bar on the chart or vertical line of volume represents one 60-minute period of market activity for AMAT. Although the price was moving upwards at a steady pace for this month, there was a great deal of movement within that range. Studying this movement can help provide buy and sell opportunities for the technical investor.

Trend channels most often appear in frequently traded stocks. Notice how volume increases as price reaches the bottom of the channel and the top of the channel. This could signal that there are supply and demand constraints within the trend channel. If a price penetrates the upper or lower trendlines, it could signal a change in trend.

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