The market may sometimes create a series of highs that can also be connected with a straight line parallel to the trend line. The result is a channel within which prices oscillate between the top and bottom lines. The top line of the channel becomes a series of resistance levels and the trend line at the bottom becomes a series of support levels. The value of this pattern is that the basic up-trendline along the bottom can be used for taking new long positions and the channel line along the top can be used for short-term profit-taking. The reverse is true for the down-trends.
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