Stock Channeling - Stock Trends

When stocks are in a channel, they show repeated movement between the same two price points. The high price in the channel serves as resistance, while the low point acts as the support level. Channeling stocks are stuck in a horizontal price action. Sometimes this channeling movement occurs in a matter of days, while other times the channel can take weeks to complete.

There are several ways that traders can play channeling stocks.

• A trader may opt to buy the stock when it emerges from the support level and begins its ascent back up the price chart. They will sell near resistance or when it hits resistance and begins to turn over.
• • A trader may opt to short the stock once it reaches a resistance level and begins to fall back toward its support level. They will short the stock when it is at its highest point and return it when it gets closer to the floor price level.
• A trader may also choose to use options with channeling stocks, buying call options when the price is ready to go up and buying put options when the price is ready to fall. But not all channeling stocks are optionable and sometimes it's just as cost-effective to simply buy the stock. A stock must sell for at least $5 in order to have options.

Channeling info by BetterTrades Charts