Trend channels are a technical analysis tool used to identify the direction and potential range of price movement for security. There are two main types of trend channels: ascending and descending.
An ascending channel is a bullish pattern that is formed when the price of a security is moving higher and two parallel lines are drawn, one that acts as a resistance level and the other as a support level.
A descending channel is a bearish pattern that is formed when the price of a security is moving lower and two parallel lines are drawn, one that acts as a resistance level and the other as a support level.
Some traders also use a diagonal channel which is a channel that is angled either up or down. It is a visual representation of the price action for a security, with lines acting as support and resistance levels, and can be used to identify potential buy or sell points.
It is worth noting that trend channels are not exact predictions of future movement, they are a general indication of the direction of security.