Price channels are a technical analysis tool used to identify trends and potential trading opportunities in financial markets. They consist of parallel lines drawn above and below an asset's price movement, representing support and resistance levels. The upper line connects the highs, while the lower line connects the lows, forming a channel that prices tend to stay within during a trend.

There are two main types of price channels:

1. Ascending Channel – Formed by higher highs and higher lows, indicating an uptrend.

2. Descending Channel – Formed by lower highs and lower lows, signalling a downtrend.

3. Horizontal (Ranging) Channel – Prices move sideways between parallel support and resistance levels.

Traders use price channels to determine entry and exit points. Buying near the lower channel line (support) and selling near the upper line (resistance) is common in uptrends, while the opposite applies in downtrends. A breakout above or below the channel may signal a trend reversal or acceleration.

Popular methods for drawing channels include using trendlines, moving averages, or the Keltner and Bollinger Bands. Price channels help traders visualise trends, manage risk, and improve decision-making.