Description

• Channels are simply the highest high and lowest low lines plotted around price to act as support and resistance levels
• Price channels sensitivity completely depends on no of bars taken into consideration

Interpretation

• Upper channel acts as a resistance when price touches it and the stock reverses
• Price touching lower channel band finds trading support and stock grow stronger with this i.e. go up
• Price breaking upper band is similar to price breakout and may continue rally upward significantly. Similarly on breaking downward below lower band, it might make trail down to make new lows

Default Parameters Used/Inputs

• High line
• Low line
• Bars- number of bars for calculation

Returns/Output

Upper Band and Lower Band value of the stock

Formula

Upper Band = Period (highest)
Lower Band = Period (lowest)
Where, period = No of bars