Parallel Channels Part 2

Following from part one.

The idea of trading channels is one of perfection and simplicity. However, it is important to be aware that channels may not be perfectly respected, with price not completing touches to either top or bottom.

Sometimes price may even leave the channel only for it to re-enter the channel.

Knowing that partial declines and rises can occur will enhance your probability when trading a channel.

Channels may be adjusted depending on the trend. But remember that you should not adjust a channel in an attempt to fit your bias.

Channels serve to remove our bias.

Time Stamps

2:22 – EOS Previous COTW (DO NOT TRADE THIS)

12:52 – PARALLEL CHANNELS

• Overview from pt. 1

29:11 – PARTIAL DECLINES / RISES IN PATTERNS / CHANNELS

• Price moves along in a pattern but does not reach the trendline of one of the moves
• Not touching top = weakness
• Not touching bottom = strength
• For drawing channels, you look for respected candle closes or S/R levels (wicks and candle closes are both ok)
• When channels are broken they should be left on the chart. They can act as support/resistance if/when price revisits
• Sideways channels are more respected than parallel channels

TIP:

If range/PA is very choppy you can switch to the line (instead of candlesticks) = clear

54:04 – WHEN TO OR NOT TO ADJUST A CHANNEL AFTER A BREAK

• If a candle closes outside of the channel it does not mean it is bullish if it is a lower high.
• If price breaks out of the channel backtest and takes the high, leave the channel as it is.
• If the price closes back inside the channel you can adjust it (no HH)

 57:58 – EXAMPLES ON BTC and Q&A