How to Trade Channels in Forex | Breakouts, Reversals & Trend Riding Explained

Hello traders, Vladimir here from Home Trader Club. In this video, I want to share with you 3 very powerful ways to trade channels. As you know, channels, tunnels, you name it, doesn't matter, parallel lines, uh, it's one of the strongest, most used, uh, in times methods of the technical analysis to spot amazing trading opportunities simply because you connect directly to an ongoing trend and/or it gives you sort of anticipation level where you can expect the level, the price to reach, and mainly when. It gives you also the where and the when, which is Essential for traders. Let's break it down. Before the charts, this video would be presented on the C-Trader platform. Why C-Trader? I can talk about that for hours. For those of you who know me, you know that I am a MetaTrader trader. But C-Trader proved to be a league on its own. Here are all the reasons why C-Trader is superior to many others of the trading platform available for us, the retail traders, and why it is going to be very likely numero uno. And I also want to remind you that I created a dedicated playlist where I upload videos about the cTrader platform, how to use the platform itself, all the different features, and also different trading strategies that should be implemented on the cTrader platform. So make sure you watch this very playlist if you still did not on this very channel. And now let's begin. So first of all, where do you find the fantastic tool that will help you to draw channels. So in the cTrader platform, right here on the toolbar, you would see the price channel. You click on that and from the starting point, it will start to draw 2 parallel lines. Okay? So what you have to do is while you are holding the mouse button, you just take it through the price channel as you see that. Now, in order to I will get back to that. In order to do a channel, let's break down the logic quickly. What does that mean? Channel is a way where we can put 2 parallel lines, not necessarily, you have to see the price touching right on the line. It can sometimes glitch slightly above, slightly below, and it's absolutely fine. The market is not perfect, so don't look to make perfect drawings. It doesn't exist. Channel also could have not ideal parallel lines, something like that. Okay, 2 lines not superbly parallel, but it's absolutely fine. So the channel is basically the border, right? We have for the sequence of highs and lows. Up trend channel is when you have sequence of highs and lows moving, of course, to the upside, and you can basically put a border there on the peaks and on the bottoms. A downtrend channel would be the opposite when you have a sequence of lower highs, lower lows where you can simply again put the lines and limit that, right? Put the borders right there. So this gives us the channel or tunnel or you name that as you would like to. It really doesn't matter. It gives you the options to trade it. How and why? There are 3 very powerful ways that I love to use and which I will be sharing in this video, of course. But this is first of all how you define a channel, find the channel, and use that. Now, very important thing is some traders say that you can see channels only in the, in That's absolutely true because that's how they're visible. But as soon as you have low, high, low, and ideally another high, you can put the line there. Will the price stay inside the channel? We don't know that. And that's why there are 3 methods to use the channels, right? As long as it stays inside, you can trade it. If it leaves the Bollinger Bands, there are ways to trade it as well. So let's break it down all these ways. First of all, once again, I want to go back to the platform and the toolbar here, and you go to the price channel. And from the starting point where a trend starts, it gives you the lines. You can of course adjust the lines as you wish, and you can see the channels would not be perfect, right? Some lines, as you can see, would not touch all the lows, and it's absolutely fine. What I love to do is basically create between 10 to 20% deviation from the top and the bottom. So let's say if this channel is like, for example, let's measure that. This is about 800 points. Okay? So that means 80, between 80 to 160 points on the bottom and same on the top. And that gives us some Beautiful observation, more visual observation on where the price is expected to reach and where the price is expected to bounce. Okay, so that that will help you to understand that. So once again, once we spot low, high, low, we can put the lines. Will the price no will be moving there? We don't know. But as long as it will, we can trade this channel. And the next time the the price, for example, here it bounces, here it bounces, here it bounces, and it respects the up channel, you can look for your trading opportunities to ride that trend. So this is the very first way, is ride with the trend. Okay, the first method. And the best way to do that, of course, you can put here many different indicators, but price, look for The candles. Okay, in that case, you got a beautiful morning star. And a trick that I love to use is the RSI to, in an uptrend of course, go below the 50 and bounce back above the 50. That gives a beautiful return back to the bullish view. Here, another one didn't cross down the 50, but bounced directly from the 50 and provides the opportunity to enjoy this momentum. So this is the very first way to go with the channel as long as it stays up. Up to where can you expect the price to run? As long as the price is inside the channel, you can, as I said before, 10% to 20% deviation of the channel, right? If this is the top, so that's the top as well. So once it goes and bounces from the bottom of the channel. It can also do it slightly below, it's absolutely fine. You should be aiming to the top 10-20% of the channel. Okay? Or as long as there will be signs against you forming before it reaches the target. So this is method number 1. Let's go to the next one. For the next one, let's Talk about the next opportunity, the next pair. This would be the euro dollar. I think at the euro dollar, and if we break down the channel here, let's put the lines. This is the bottom. This is the top. Okay. So once again, it will not be perfect, but that's how it goes. Now pay attention as it starts here, the low and the high. I of course can start drawing this channel. Right? And if it would be broken, I would simply adjust that, which happened here. And then it rebuilt its structure. It is a sequence of lower highs, lower lows, which is fantastic. And then it makes another high, right? Which I love and use in that case. So how do I like to work with the channel? And you already know. Quick return to the method number one. Let's actually adjust the RSI. I want to show you the same with the 50%. If you go back to the levels and you add the 50, I will make it a bit different color and style of the line. Okay, so when you are looking to sell inside a bearish channel, look for the RSI to go above 50 and then break it down again. Okay, that gives you the indication. Indication can go lower. So that's, uh, of course a great way, but there is another way, and that's the parallel lines, which also will help you with the breakout. Either— I don't know if the price will break down and will continue lower, or if it breaks up. So what to do in that case? So once it managed to break it out of the ongoing channel, wait for the price to close above, go for a retest bounce back on the retest as it happens here. And that's your opportunity to start looking for the buys up to where you put the parallel lines and it gives you some sort of indication up to where it can go. You will note that, that the waves inside the channel are usually getting have the same sort of an angle. That would be said also to the opposite direction, pretty much in the same angle. That means you also know up to where and you know up to when, until when, not up to when, until when you can expect the price to reach the target. And this is the second powerful method when it breaks out of the channel. Let the break happen. Let the retest happen. Look for the bounce back. How? With the same methods. Candle patterns, of course. Look for candles that make from lower highs, lower lows to higher highs, higher lows. And also look for the RSI to gain the momentum. You can also use the MACD crossover to the upside and it gives a great indication. Combination between the indicators and the price. This is the second method. And the third method is the riskiest one, but also can provide some great opportunities, and that's to trade the bounces on the opposite direction of the channel. So for example, let's take a look on the euro pound. So the euro pound, for example, once again, we can see we have the sequence of lower highs, lower lows, right? And as I said before, sometimes the price can leave the channel slightly on the top or the bottom, right? But as long as it comes back inside, you are good to go. You can put the 10-20% up and 10-20% above or outside the channel in that case and below the lines, just to give you some indication up to when the price is acceptable to cross. So the opposite means to look to trade from the bottoms and to try and enjoy these rallies back to the top of the channel that will later on provide the opportunity to join the trend. And the best way to do that is to combine Support resistance levels and also bullish divergences, which I love a lot. If you follow me, you know that. So what do I mean by that? As soon as, and once again, you put some 10-20% deviations, right, of the channel, and as soon as you reach the bottom, look for bullish divergences here, here, and here. For example, what do I mean by that? If the market makes lower lows and it isn't the bottom of the channel, look for higher lows on the MACD and the RSI. If that does not happen, then you simply cannot trade it. In that case, MACD does not have the bullish divergence. But if you check the RSI at that point, it does have a bullish divergence from the bottom of the channel. Voilà, great sign. And if the candles make the reversal, look to trade them to the the top of the channel as long as the bottom of the channel holds. Okay, similar to the next opportunity which reaches here. Now it also has a bullish divergence on the MACD, lower lows on the chart but higher lows on the moving average of the MACD as well as the RSI. And that's the place for you to look for the buys to the top of the channel. Similar situation here, it is forming a potential divergence here, and that means from there we start looking for potential buys as long as the bottom of the channel actually holds. So these are 3 very powerful ways to use price channels, which are based on purely price action sequence of highs and lows that define trends. Uptrend sequence of highs and lows going to the upside, downtrend sequence of highs and lows going to the downside. And when you put the lines together, you have 3 absolutely powerful methods. Trade within the channel, inside the channel, trade the break of the channel for the duplication of the channel to the direction of the breakout, and the third way to trade in the opposite direction of the channel. Riskier, but still can deliver some great profits and trades. That's it for this video. As always, I hope you find value in these opportunities. Um, I would like to to thank you for watching. If you have any questions, don't hesitate to ask in the comment section. And if you're new to our channel, make sure you subscribe with the subscribe button below this channel so you can enjoy all the interesting trading content we upload here for you. Thanks for watching. Best to you and yours. I'll see you soon with more. Good trading. Bye for now.