Once a channel is broken you have the potential to duplicate the original channel, with one above or below depending on the breakout.
Duplicating or double stacking channels can provide price targets for the breakout.
Be aware this method is not recommended to be used alone, confluence is key.
The .25 trading range provides additional levels that work well for swing trades, 4HR time frame and above.
The .25 levels can provide additional levels for entries and taking profit during a range.
Once a channel is broken you have the potential to duplicate the original channel, with one above or below depending on the breakout.
Duplicating or double stacking channels can provide price targets for the breakout.
Be aware this method is not recommended to be used alone, confluence is key.
The .25 trading range provides additional levels that work well for swing trades, 4HR time frame and above.
The .25 levels can provide additional levels for entries and taking profit during a range.
Remember to use the Fibonacci Retracement tool to produce this range, using the following levels:
0
0.25
0.5
1
Remind yourself to never expect a channel to be respected to perfection.
Over and under channel patterns occur because the market will always want to win over you.
Have an idea of where the majority have placed their stop loss, and expect the market to look to take that liquidity.
This can help you locate your ideal stop loss and invalidation level.
While this series focuses on trading ranges within a channel, you still need to know how to analyse and trade once a channel is broken.
You can often look for a retest where price breaks out and tests the top of the channel for support, or even re-enter the channel to stop people out before continuing the breakout.
Having the various scenarios in mind will give you a greater edge over the rest of the market.
Master parallel channels while never being dependent on them.
A creative trader will recognise unorthodox patterns, as you continue to develop you will also do the same.
Key Points of the Lesson
ADVANCED IMPLEMENTATION
Find price targets by duplicating a channel together with confluences.
Use the 0.25 internal levels to trade the range.
You can take advantage of the bearish/bullish under/over price movements.
DUPLICATING CHANNELS
A really good way of getting targets for moves.
Don’t use it alone, look for confluence!
TRADING 0.25 RANGE
Draw channels from candle close to candle close with marked ‘highest level of range’ and ‘lowest level of range’ on the 4H+ chart.
Use Fibonacci to divide the channel (0.25, 0.5, 0.75, 1).
Use the bottom of the channel for opening longs and the top for taking profit and vice versa.
OVER AND UNDER CHANNEL
BEARISH UNDER OVER: price runs upwards out of the channel, take stops and goes back down on high sell volume, break out of the channel downwards. Now you look to short the mid to high of the channel (ladder) when you come back in and SL above the high.
BULLISH OVER UNDER: price runs downwards out of the channel, take stops and goes back up on high buy volume, break out of the channel upwards. Now you look too long the mid to high of the channel (ladder) when you come back in and SL is below the low.
Use a measured move of the channel to get targets together with other confluences.
ENTRIES ON RETEST AND SL
Liquidity runs are engineered to fill bigger limit orders.
Use wider stop losses based on market structure.
Perfect scenario breaking out of the channel: you get the re-test of the channel.
1: Front run: people do not get the chance to buy.
2: Retest goes deep into the channel: people get stopped out (TIP: use 2 HH/LL for SL).
TAKE HOME MESSAGE
Duplicate channels to find price targets.
Use Internal 0.25 levels for higher time frame channels.
Expect liquidity runs such as over and under.