> For the complete documentation index, see [llms.txt](https://faq.midas-club.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://faq.midas-club.com/faq-en/faq-midas-up/price-channel.md).

# Price channel

<table data-card-size="large" data-view="cards"><thead><tr><th></th><th data-hidden data-card-cover data-type="image">Cover image</th></tr></thead><tbody><tr><td><p>How the price channel works:</p><p>➡️<a href="https://youtu.be/ZfFy8onNNjE">Watch on YouTube</a></p><p>➡️<a href="https://vk.com/video-228172732_456239130">Watch on VK</a></p></td><td><a href="/files/4c74db34af4add7d58dc40dfa296c7ba8b3ede79">/files/4c74db34af4add7d58dc40dfa296c7ba8b3ede79</a></td></tr><tr><td>How to trade in the channel:
<br>➡️<a href="https://youtu.be/FWi6BirHBWQ">Watch on YouTube</a>
<br>➡️<a href="https://vk.com/video-228172732_456239132">Watch on VK</a></td><td><a href="/files/c8e64b870e5d4fb1349b6d0c6b7d6927879e68ef">/files/c8e64b870e5d4fb1349b6d0c6b7d6927879e68ef</a></td></tr></tbody></table>

## Channel representation on the chart

The indicator automatically draws the current price channel, within whose boundaries the price moves:

* <mark style="color:red;">**Red channel**</mark> - downward local trend
* <mark style="color:green;">**Green channel**</mark> - upward local trend
* <mark style="color:yellow;">**Yellow channel**</mark> - sideways movement, the market is in equilibrium
* The steeper the angle, the stronger the trend💪

{% tabs %}
{% tab title="Ascending channel" %}

<figure><img src="/files/59da4bbc0146043c6a3452b1626727205f0cc3f7" alt=""><figcaption></figcaption></figure>
{% endtab %}

{% tab title="Descending channel" %}

<figure><img src="/files/c1aa4714b7beabf39c102eaa63599e96dcf6aa26" alt=""><figcaption></figcaption></figure>
{% endtab %}

{% tab title="Sideways market" %}

<figure><img src="/files/892bb00f7a927653bc2a7cb04b119e5eb2d912f4" alt=""><figcaption></figcaption></figure>
{% endtab %}
{% endtabs %}

## Using the channel in trading

Price channels are often used as trend lines, off which price can bounce, since price can stay within the channel boundaries for a long time:

* The lower boundary acts as support, where price can find footing - at this moment, consider buy trades
* The upper boundary of the channel often acts as resistance, where price may slow down or reverse - at this moment, consider sell trades
* The central line works similarly and is also support and resistance
* Use the channel direction to filter false signals against the trend

{% hint style="success" %}
First, try the simplest [price channel strategy](broken://pages/0e079cf820f867cc577b738bbebf9c43e290c49b#strategiya-torgovlya-v-kanale) from the indicator developer
{% endhint %}

{% tabs %}
{% tab title="Bounces in a descending channel" %}

<figure><img src="/files/745acfce7b5a25efeb25c1510668532516e4ba93" alt=""><figcaption></figcaption></figure>

In the example, we see how price slows down as it approaches the lower boundary of the channel, then a reversal follows. Likewise, we see how price reacts at the upper boundaries of the channel.

The safe option is to trade from the upper boundaries in a descending channel in continuation of the bearish trend.
{% endtab %}

{% tab title="Bounces in an ascending channel" %}

<figure><img src="/files/178f33080813e66499f05249c4e35e8496fecb53" alt=""><figcaption></figcaption></figure>

In the example, we see how price slows down as it approaches the lower boundary of the channel, then a reversal follows and the uptrend continues further

The safe option is to trade from the lower boundaries in an ascending channel in continuation of the bullish trend.
{% endtab %}

{% tab title="Bounces from the central line" %}

<figure><img src="/files/eaeb0898fb23b8d396f49ae03e5eb409cdcc52aa" alt=""><figcaption></figcaption></figure>

In the example, we see how price slows down as it approaches the central boundary of the channel, then a bounce follows and the impulse continues, and when price broke through the central line, it became resistance.
{% endtab %}
{% endtabs %}

Channel width is used to assess volatility:

* Wide channel - high volatility and a strong trend
* Narrow channel - weak trend or price consolidation

{% hint style="info" %}
When the channel narrows, price consolidates - it stretches like a spring. This points to a strong move soon. Often the direction of the move marks the start of a strong trend.
{% endhint %}

{% tabs %}
{% tab title="Wide channel" %}

<figure><img src="/files/8c97bc91aeabdaabf39a34900476ad9581935388" alt=""><figcaption></figcaption></figure>

In the example, we see that the channel width equals 52% of the net movement, which indicates high volatility of the asset.
{% endtab %}

{% tab title="Narrow channel" %}

<figure><img src="/files/62cbc014a4dcb243ca7088b44042f5a625e40c45" alt=""><figcaption></figcaption></figure>

In the example, we see that the channel width is only 2% of the net movement, which indicates low volatility of the asset and its consolidation.
{% endtab %}
{% endtabs %}

## Channel trading strategy

<div align="left"><figure><img src="/files/d1b78cf16f95159bafdff51706ec7450e4aa5e5f" alt="" width="563"><figcaption><p>An example of trading on a signal within a bounce from the upper boundary of a descending channel</p></figcaption></figure></div>

We use [**price channel**](/faq-en/faq-midas-up/price-channel.md) with signals:

\- when price drops to the lower boundary of the green channel, we wait for a signal <mark style="color:green;">**BUY**</mark> and open <mark style="color:green;">**a long**</mark>

\- when price rises to the upper boundary of the red channel, we wait for a signal <mark style="color:red;">**SELL**</mark> and open <mark style="color:red;">**a short**</mark>

💡Works best in trend continuation and in sideways markets on higher time frames

💡It's better to skip signals against the trend (see the example in the screenshot)

💡Experienced traders can open trades earlier, without waiting for the signal

<table data-card-size="large" data-column-title-hidden data-view="cards" data-full-width="true"><thead><tr><th></th><th data-type="content-ref"></th><th data-hidden data-card-cover data-type="image">Cover image</th></tr></thead><tbody><tr><td>How to repeatedly capture <strong>small price movements and scalp with Midas</strong></td><td><a href="/pages/4f742d49098c6bc4b452e07456970aba1fdfd47a">/pages/4f742d49098c6bc4b452e07456970aba1fdfd47a</a></td><td><a href="/files/ac65d0c5d925a2e4450784eb14d80fa1afe9b55b">/files/ac65d0c5d925a2e4450784eb14d80fa1afe9b55b</a></td></tr><tr><td>How to capture powerful intraday moves and not miss the last train</td><td><a href="/pages/b61b01b27f1eee36e0a47a5e95eab39c0df0dced">/pages/b61b01b27f1eee36e0a47a5e95eab39c0df0dced</a></td><td><a href="/files/0f795ffc7aaed3b45e096e4d7fda85208f3acba5">/files/0f795ffc7aaed3b45e096e4d7fda85208f3acba5</a></td></tr><tr><td>How not to chase every candle but take a clear piece of trend movement</td><td><a href="/pages/111bcb4c17c7a71ec9b5db950abe29a486104678">/pages/111bcb4c17c7a71ec9b5db950abe29a486104678</a></td><td><a href="/files/f1d8a1aef8cb6d4dbbc9cdae4b35dc3cfaf0a2f9">/files/f1d8a1aef8cb6d4dbbc9cdae4b35dc3cfaf0a2f9</a></td></tr><tr><td>How to buy back a local market bottom on higher timeframes without noise</td><td><a href="/pages/d0eecc882c19c8daf2e51fd060ad772efa7175c0">/pages/d0eecc882c19c8daf2e51fd060ad772efa7175c0</a></td><td><a href="/files/9f3d6282c643cd41c19f535967873c523c0a6ccc">/files/9f3d6282c643cd41c19f535967873c523c0a6ccc</a></td></tr></tbody></table>