| Stock channeling refers to the process of trading | | | | line, thus preventing the stock from acquiring new and |
| within a price that is bound by two parallel trend lines. | | | | lower prices. As such, buyers are unable to make any |
| These two lines give the demarcation between the | | | | move and the performance of the security remains at |
| high and the low prices and the area between them is | | | | a horizontal position for a very long time. The range |
| the area around which the stock is channeling. | | | | can only be resolved with a high volume thrust, either |
| The concept behind the two trend lines is not so hard | | | | with new highs or lows. |
| to understand. The upper line acts as a resistance line, | | | | The channeling stock offers a wide range of |
| meaning, that the prices cannot go beyond that upper | | | | opportunities for trading. Traders who buy at the |
| line. The lower line acts as the support line and | | | | Support line range do so with an anticipation that the |
| represents the lowest prices at which the shares may | | | | stocks will move back to the top of the channel. Other |
| be sold. Any channeling stock that breaks out of the | | | | trades sell them off at the resistance point with the |
| lines tends to suffer some consequences in relation to | | | | hope of a move back to the lower point so that they |
| the duration, the width and the strength of the | | | | can realize profits. Other traders are always on the |
| breakout. | | | | look out for a break out of the channel which means |
| Since the resistance line is the highest price at which | | | | favorable prices to them. |
| the stock can be sold, sellers tend to lurk at that upper | | | | |