Parallel Channels Part 3

Once a channel is broken you have the potential to duplicate the original channel, with one above or below depending on the breakout.

Duplicating or double stacking channels can provide price targets for the breakout.

Be aware this method is not recommended to be used alone, confluence is key.

The .25 trading range provides additional levels that work well for swing trades, 4HR time frame and above.

The .25 levels can provide additional levels for entries and taking profit during a range.

Remember to use the Fibonacci Retracement tool to produce this range, using the following levels:

0

0.25

0.5

1

Remind yourself to never expect a channel to be respected to perfection.

Over and under channel patterns occur because the market will always want to win over you.

Have an idea of where the majority have placed their stop loss, and expect the market to look to take that liquidity.

This can help you locate your ideal stop loss and invalidation level.

While this series focuses on trading ranges within a channel, you still need to know how to analyse and trade once a channel is broken.

You can often look for a retest where price breaks out and tests the top of the channel for support, or even re-enter the channel to stop people out before continuing the breakout.

Having the various scenarios in mind will give you a greater edge over the rest of the market.

Master parallel channels while never being dependent on them.

A creative trader will recognise unorthodox patterns, as you continue to develop you will also do the same.

The range of the 618 Fibonacci level can provide a great channel to trade.

Measuring from a swing low to high, and then from the high to the low of the range, you can create a range between two 618 levels.

Time Stamps

2:26 – LINK Previous COTW (DO NOT TRADE THIS)

• If ETH and LTC are doing well altcoins will follow
• Logical retracement ≠ FOMO

19:59 – DUPLICATING CHANNELS

• A really good way of getting targets for moves
• Don’t use it alone (confluence!)

24:06 – 0.25 TRADING RANGE

• Within parallel channel you divide it (0.25, 0.5, 0.75, 1)
• Daniel draws channels from candle close to candle close with marked ‘highest level of range’ and ‘lowest level of range’ on the 4H+ chart.
• SL is above the high and above the low (be smart with placement).

30:10 – OVER AND UNDER CHANNEL

• You get a heads up of where the trend is going
• BEARISH UNDER OVER: price runs upwards out of the channel, take stops and goes back down on high sell volume, break out of the channel downwards. Now you look to short the mid to high of the channel (ladder) when you come back in and SL above the high.
• BULLISH OVER UNDER: price runs downwards out of the channel, take stops and goes back up on high buy volume, break out of the channel upwards. Now you look too long the mid to high of the channel (ladder) when you come back in and SL is below the low
• Generally, you take a measured move of the channel to get targets (confluences …)

38:31 – ENTRIES ON RETEST AND SL

• Perfect scenario: you get the re-test of the channel.
• Front run: people do not get the chance to buy
• Retest goes deep into the channel: people get stopped out (TIP: use 2 HH/LL for SL)

44:34 – OVERALL 0.618 TO 0.618 CREATING CHANNELS

• Pull a Fib Retracement from swing low to high, then pull another from the high to current swing low.
• Highlighting 618-66 levels to trade a range between them.
• Always look for selling and buying pressure to be prepared for a breakout of this range.

46:18 – TA + Q&A