If the price is in between parallel trend lines, it is called a “pricing channel”. It is divided into two as the ascending price channel and the descending price channel. Both of these give us opportunities to buy and sell.
As a matter of principle, a position is created in line with the price coming back when it reaches the channel borders. This way, it is assumed that the price will move inside the channel. When such a position is designed, a point out of the channel is chosen as the stop the loss order. This way, when the price moves out of the channel, the loss is limited.
In the descending price channels, it is a must to look for selling positions because it might be risky to open buying positions as the price is going down. In such a case, when you open a buying position, it is hard to go up the entrance level since the price is going up relatively low. That’s why the profit will also be limited. In the ascending price channels, on the other hand, it is better to look for a buying position because the price tends to generally go up. In this case, if a selling position is opened, the risk will be more as the distance will be little. In the ascending price channel, while looking for a profit opportunity with the buying position, it will be a right move to put the stop the loss point a bit out of the channel.
Some examples of price channels are shown below.