Trend channels are a technical analysis tool used to identify the direction and potential range of price movement for security. There are two main types of trend channels: ascending and descending.
An ascending channel is a bullish pattern that is formed when the price of a security is moving higher and two parallel lines are drawn, one that acts as a resistance level and the other as a support level.
A descending channel is a bearish pattern that is formed when the price of a security is moving lower and two parallel lines are drawn, one that acts as a resistance level and the other as a support level.
Some traders also use a diagonal channel which is a channel that is angled either up or down. It is a visual representation of the price action for a security, with lines acting as support and resistance levels, and can be used to identify potential buy or sell points.
It is worth noting that trend channels are not exact predictions of future movement, they are a general indication of the direction of security.

Trend channels are essential tools in technical analysis, helping traders identify price movements within defined boundaries. The main types include:

Ascending Channel: Formed by higher highs and higher lows, indicating an uptrend. The upper trendline connects swing highs, while the lower trendline links swing lows.

Descending Channel: Characterized by lower highs and lower lows, signaling a downtrend. The upper trendline joins lower peaks, and the lower trendline connects lower troughs.

Horizontal Channel (Trading Range): Prices move sideways between parallel support and resistance levels, showing consolidation.

Channels can also be classified as price channels (using highs and lows) or regression channels (statistical, based on linear regression). Traders use these channels to spot breakout or reversal opportunities, enhancing decision-making.