Price Channel

Price Channel plots upper and lower boundaries based on the highest high and lowest low over a specified period, helping traders identify potential breakout or reversal points within a price range.

Definition

The Price Channel indicator calculates the highest high and lowest low of the trailing number of bars specified by the input Length. It appears on a chart when a security's price becomes bounded between two parallel lines. Depending on the trend, the channel may be termed horizontal, ascending, or descending. Price channels are banded trend-following indicators, plotted as overlays, where 2 or more lines are at equal distance from a middle line or a center channel. These channels can be based on different types of moving averages, standard deviation, average true range, linear regression, etc. They contract and expand according to price action. When a market moves above the upper band, it is a sign of market strength. Conversely, when a market moves below the lower band, it is a sign of market weakness. A sustained move above or below the channel lines may indicate a significant breakout.

This indicator is not displaced by default. Changing the Displace input Displace to a positive number displaces the plot to the left, and changing it to a negative number displaces the plot to the right.

When applied to a chart, this indicator displays two plots in the same subchart as the main data series.

Default Inputs

Length( 20 ) sets the number of bars for the calculation.

Displace( 0 ) sets the number of bars to displace the plot.