Price channel
Also called: channel, horizontal channel, trading channel, range between levels
A price channel is the range price moves in between two levels: a lower one and an upper one. Many traders draw channels as sloped parallel lines along a trend. The ChartThread course does not. Here a channel is always horizontal, the price range between two levels, never a sloped line, because every level is one exact price.
How a channel forms
A big move stops at a trend-change level, price turns, and the next move stops somewhere else. The two prices are the edges of the channel. Price can stay between them for days or months.
On a real market. SpaceX’s perpetual contract fell from 228.00 to 104.31 on 3 August 2026 and turned. The channel after the turn runs from 104.31 up to the high of 176.31 on 6 October.
Where the volume sits
One of the course’s rules for trend-change levels: all the biggest volumes are inside the channel, not at the level. On the most powerful levels volume often decreases on the way in, because no one wants to be first, and the heavy trading comes after the turn.
On SpaceX, volume in the last week of the fall was 5.4 to 9.1 million contracts a day. From 4 to 7 August, as price moved up from 104.31 into the channel, it was 16 to 21 million a day. Not every chart shows this cleanly: on gold’s rise into 4,889.97 in April 2026, the heaviest day was the low the rise started from.
Levels inside the channel: four stops apart
Between its edges price leaves smaller turns. You may draw a level inside the channel only if there are at least four stops between neighbouring levels. The course’s stop is 10% of the daily average true range (ATR), so four stops are 0.4 ATR. Closer than that, two levels are one level: a stop beyond one would sit on the other.
Example. A channel runs from 100.00 to 120.00 and the daily ATR is 5.00. One stop is 0.50, four stops are 2.00. A turn at 101.50 is only 1.50 from 100.00, so it is a test of 100.00, not a new level. A turn at 108.00 is far enough from both edges to be drawn.
On SpaceX the daily ATR on 3 August was 6.83, so four stops were 2.73. The return to 105.40 on 6 August, 1.09 above 104.31, was a test of the level.
Price channel vs trading range
A trading range can mean one candle’s high-to-low distance or a sideways market. A price channel in this course is always defined by two levels. A narrow, long channel next to a level, where a big player builds a position, is called accumulation and is measured in daily ATR.
Price channels in this course
The channel idea comes with trend-change levels, where the four-stop rule and the SpaceX volume are worked through on real data. Why levels close to each other are one level is explained in how to draw a level.
Questions about price channel
What is a channel in trading?
Many traders draw a channel as two parallel lines, often sloped up or down. In the ChartThread course a channel is always horizontal: the price range between two levels, such as a low where a fall stopped and a high where the next rise stopped.
Why does this course not use sloped channels?
Because a level is always one exact price, taken from the high or low of a real candle. A sloped line changes price every day and has no forming candle, so it is not a level, and a channel is defined by its levels.
How close can levels inside a channel be?
At least four stops apart. A stop is 10% of the daily ATR, so four stops are 0.4 ATR. With a daily ATR of 5.00, neighbouring levels must be at least 2.00 apart; closer than that they are one level.
Where is the most volume in a channel?
Inside it. The course’s rule is that the biggest volumes are traded inside the channel, not at the extreme. On the most powerful levels volume often shrinks on the way into the level.