The market can be moved between parallel support/resistance levels. Price channel between two parallel lines may often be drawn in market with trending. The key to price channel is that the lines be parallel to each other. The value of the price channel in the following: predicting the ongoing speed of the trend depends on the lines being parallel.
Unlike trend lines, which may be drawn on any chart with two relative
lows/highs, price channel should not be forced on a chart where they
are not quickly apparent. Once a trend line is established - create a
duplicate parallel line on the chart. Then move it up to the relative
highs above or down to the relative lows below the trend line. If two or
more fit with the line, there may be valid price channel.
Otherwise,
the market may simply be too volatile - even in the midst of a strong
trend - to plot a channel.
In the above example support/trend line is valid but creating parallel line on the opposite side of the prices does not add any value to the chart and it is not warranted by the data. Placing support/resistance line where it does not belong will simply provide you with false signals to buy or sell.
