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ForeXecutor
| Price Channels |
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| Written by Administrator | |
| Wednesday, 26 November 2008 | |
Price Channels are similar to Bollinger Bands: lines are above and below the mid price line. By specifying a number of periods, Price channels are created and chart specified periods high or low, above and below the mid price line. In this example, a 14 period price channel is applied to the chart. The Price channel charted the level of the highest high in the last 14 periods above the mid price line. It also charted and the lowest low in the past 14 periods below the mid price line. The main difference between Price channels and Bollinger Bands is that they use the high and low price’s over a period of time instead of moving averages to draw the top and bottom lines. Trading with Price channels should be used on longer term charts. Hourly charts used in conjunction with support and resistance should be the shortest time frame used. Daily, weekly and monthly charts and will usually generate the best breakout points.  Signals are generally generated when price action breaks above or below their respective lines. Confirmation with a secondary none co linear indicator is always recommended. In the above example a 14 period ADX/DMI is used.
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