A worked example that explains the rule, not a stock price. The circle marks the first close beyond the level. The blue line is the target. The orange line is the invalidation. Prices are in the right-hand column, and sessions sit under the volume bar.Hollow green candles closed above their open, and filled red candles closed below it.
Numbers in the example chart
From the same calculation that draws the shape and writes the "Measuring the target" section below.
Trigger level
$92 · at the close of session 65
Target
98$
Invalidation
90$
Chart span
80 sessions
What it is
Two parallel rising lines: the lower joins the lows and the upper joins the highs, and price moves between them.
The trend rises at a steady rhythm, and the two boundaries show where buying is heavy and where profit-taking is heavy. The channel keeps its width as long as the rhythm holds. The falling channel is its mirror image: two parallel downward lines, read the same way in the opposite direction.
When the trigger starts and when it fails
Signal
A close that bounces off the lower boundary by at least a quarter of the channel width.
Lower boundaryHigher lows on one line · every drop to it meets buyers.
Upper boundaryHigher highs on a line parallel to the first · profit-taking is common near it.
BounceAfter touching the lower boundary, a close that moves away from it by at least a quarter of the channel width.
Third touchA third touch on each boundary confirms the rhythm, and that is when it is decided whether price stays inside the channel or leaves it.
BreakA close below the lower boundary invalidates the channel and opens the chance of a trend change.
Recognition rules
A lower Trendline touching at least two lows, and an upper line touching at least two highs.
The two lines are parallel, with a slope difference of no more than 10% · converging makes it a wedge and diverging makes it a broadening pattern.
A third touch confirms each boundary.
Volume rises near the lower boundary, where buyers step in.
A touch is not a close: price may poke through the boundary with a wick and then close inside it, and the call goes to the close.
The channel width is roughly constant along its length and is measured by the vertical distance between the two lines.
Measuring the target
The target is the channel's upper boundary at the time of the signal. In the example price bounces off the lower boundary near $92, so the target is $98, and invalidation is a close below the lower boundary near $90.
Where it fools you
Two lines with two touches are not a channel. A channel keeps its width while a wedge narrows. Buying at a touch of the lower line before a close that bounces off it falls into a channel break.
Breaking the lower boundary does not always mean the trend reverses: a channel with a gentler slope may begin, so the read afterward comes from new highs and lows.
Drawing the lines through the highest and lowest wicks makes the channel wider than it really is, and drawing them through closes makes it narrower. Use one method across the whole chart.
A close above the upper boundary is not necessarily strength: it may be acceleration ahead of the end of the trend, and price quickly returns inside the channel.
Open the daily timeframe for any symbol and draw the pattern yourself. Your drawing is saved per symbol in your browser, and the terminal does not name or detect the pattern.
╱ TrendlineLower boundary and upper boundary
⇕ MeasureTarget equals pattern height
We do not detect chart patterns with a numeric rule: telling them apart takes judgment on the chart. Candlestick patterns with a numeric rule are detected daily by the candlestick pattern scanner.
The mirror image: the falling channel
The same pattern turned upside down, with the same rules in the opposite direction: what was a top becomes a bottom, and the trigger, target and invalidation all flip direction.
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