Price Channel

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 sets the number of bars for the calculation, 20 by default.

Displace sets the number of bars to displace the plot, 0 bt default.