Bullish Channel

A bullish channel is called a continuation trend pattern. The bullish channel is assembled by two parallel lines that frame the upward price trend. A line is validated when there has been at least two points of contact with the price. The more contact points it has, the stronger the trend line is and the more their breakout will give a strong sell signal.

The bullish channel is one of the most used chart patterns. You can find it on every time frame. There is no theoretical target in this pattern. The movement can continue as far as the lower band is supported.

Here is a graphical representation of a bullish channel:

Bullish channel

It is not recommended to take a short position at the contact with the upper band. Actually the trend may continue along the upper band. Besides, the movement towards the lower band are correction movements into an upward trend and are therefore less powerful.

Try to avoid false breakouts by drawing your trend lines based on high and low points of candlesticks and not their body.

The breakout often occurs at the 4th point of contact.

The more the lower band acts as support, the more the breakout will be violent.