Ascending Channel

An Ascending Channel occurs when the price action is contained between upward sloping parallel lines. Higher pivot highs and higher pivot lows are technical signals of an uptrend.

Ascending Channel Calculation

Trend lines involved with the ascending channel frame out the price channel by drawing the lower line on pivot lows, and the upper line is the channel line drawn on pivot highs.

Chart illustrating an Ascending Channel

Application of Ascending Channel

Price is not always perfectly contained but the ascending channel lines show areas of support and resistance for price targets.  Channeling stocks within ascending channels are only able to reverse course with a downside penetration of the primary ascending trend line. 

The intensity of this breakout, the duration of the channel, and the width of the channel will determine how far a breakout may carry.  An upside breakout from an ascending channel indicates a higher intensity of buying, and is a technical buy signal.  A downside breakout from an ascending channel indicates lower prices to come, and is a technical sell signal.

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