Ascending Channel
Chart PatternsA bullish price structure defined by two parallel upward-sloping trendlines. Price bounces between support (lower line) and resistance (upper line) as the trend moves higher.
What Is an Ascending Channel?
An ascending channel (also called a rising channel) is formed by drawing two parallel trendlines that slope upward. The lower trendline connects a series of higher lows and acts as Support. The upper trendline connects a series of higher highs and acts as Resistance. Price oscillates between these lines as the overall trend moves higher.
How to Trade Within the Channel
Traders use the channel in two ways. First, buy at the lower trendline (support) and sell at the upper trendline (resistance) as price bounces back and forth. On EUR/USD, a touch of the lower trendline with a bullish candle like a Hammer provides a long entry with a stop below the trendline.
Second, trade the eventual breakout. An ascending channel is bullish while intact, but a break below the lower trendline signals a potential trend reversal. Enter short on a confirmed break below with a target equal to the channel's width.
Drawing the Channel
To draw an ascending channel, start with the lower trendline connecting at least two higher lows. Then draw a parallel line from the highest point between them. At least two touches on each line validates the channel. More touches increase its significance.