Price Channel

What

2 lines represented the Price Channel. It is based on measurement of min, and max. prices for the definite number of periods.

How

The following formulas serve as the basis for the lines of the price channel:

PC Lower = LL (n). It's the minimal value from the set of all Low prices (Lowest Low) within n periods.

PC Upper = HH (n). It's the maximal value from the set of all High prices (Highest High) within n periods

The changes depending on appearing of new max. and min. prices. The indicator's lines of are dynamic lines of support and resistance.

When

Price Channels can be used to help identify support and resistance The Price Channel can also be used as a simple trend-following breakout system. The signals derived from this system are based on the following basic rules:

1. When price closes above the Upper Price Channel, buy long and cover short positions.

2. When price closes below the Lower Price Channel, sell short and liquidate long positions.

Price Channels are not usually smoothed, so they react immediately to changes in the highest high and lowest low. This means that prices will rarely be outside a price channel, even during a break out of a price range, because the price channel will move to the new high or low on the next bar or candlestick.