New article The Channel Breakout pattern has been published:
Price trends form price channels that can be observed on financial symbol charts. The breakout of the current channel is one of the strong trend reversal signals. In this article, I suggest a way to automate the process of finding such signals and see if the channel breakout pattern can be used for creating a trading strategy.
Equidistant channels are shown in the
below chart. Descending channels are marked with red lines, an upward
channel is shown in blue. Drawing of a descending channel starts with
the upper channel border, which determines trend based on the highs of
price fluctuations. The lower border is built on price lows parallel to
the upper one. The lower border can be drawn at the maximum or average
deviation. The construction of rising channels is opposite: the lower
border is drawn first, and then the upper one is plotted. When drawing a sideway
channel, we should pay attention to the previous trend, because flat price fluctuations often act as a correction to the previous movement,
which may continue after the flat period.
Author: Dmitriy Gizlyk
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