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Technical Analysis: Power Tools for Active Investors by Gerald Appel

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Channel Support and Resistance

Continuing on the theme of support and resistance, Chart 4.6 illustrates the manner in which channels can be created based upon well-established trendlines. The upper boundaries of such channels frequently serve as ongoing resistance lines.

Chart 4.6. Resistance and Support Within Trading Channels

This chart shows the Nasdaq Composite and its movement within the bullish channel that developed between March and August 2003. Line A–B represents the supporting trendline of the advance. The upper boundary of the channel is created to best encompass the majority of peaks of minor moves within the channel. The lower extension is created to match the major channel in depth.

These channels can be ...

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