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Home -> Forex Chart Patterns -> Ascending Channel: Trade with Multi-
Channel Strategy

Ascending Channel: Trade with

Multi-Channel Strategy
October 26, 2021 by Ali Muhammad

Definition
Ascending channel is a chart pattern that is made up of two upward parallel
trend lines showing the bullish price trend on the price chart.

This is a type of channel pattern in trading. It is used to identify the bullish price
trend and bullish trend reversal in technical analysis.

To learn more about other types of channels click here.

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How to identify ascending channel?

To identify ascending channel pattern on the chart, you need to understand the
basics so you can draw this chart pattern correctly. Follow the following few
steps to draw an ascending channel on the chart.

The first step to look for at least three higher lows in a series making a
bullish trend. Then draw a trendline meeting those three higher lows.
Clone the first trendline and adjust the second trendline at the higher
highs of price. Trendline can be adjusted using wicks or closing prices.
Number of trendline touches represent the strength of channel. A
stronger channel has more number of touches as compared to a weak
channel pattern.

It is very simple to draw a channel but you should find swing points to draw the
trendline. Practice the above steps 20-30 times by backtesting and analyzing the
setups to master these channels trading.

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Pro Tip: Keep in mind that candlestick should not close below the
trendline while drawing a channel on the chart. Price closing below
the trendline represents the breakout of the channel.

How does ascending channel work?

Ascending channel helps in identifying the direction of the market either it is in
an uptrend or a trend reversal has been occurred. So there are two types of
trends that can be measured using the ascending channel.

Bullish trend
Bullish trend reversal

If the price is moving up within the boundaries of the channel then the price is in
an uptrend or the market is bullish. Boundaries of the channel mean two parallel
trendlines.

on the other side, if the price has broken the lower trendline then it means a
trend reversal has occurred. Now the price trend will be bearish.

How to detect ascending channel breakout?

A channel breakout will happen when the candlestick will close below the
trendline. To identify a valid breakout, a big bearish candlestick must breach
through the trendline and should close opposite side. You can use this big
candlestick strategy to avoid false channel breakouts.

Pro tip: Avoid ascending channel breakouts during oversold

conditions

Trading plan
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6/14/23, 8:20 AM Ascending Channel: Trade with Multi-Channel Strategy - ForexBee

There are two ways to trade the ascending channel pattern in forex trading.

Trend reversal strategy

Multi-channel strategy

First of all, let’s discuss the stop-loss, take-profit, Entry, and risk management of
ascending channel pattern.

Open Sell Order

Open a sell order just after the confirmation of ascending channel breakout. You
can also wait for the price to give a minor pullback and then place a sell order to
increase the risk-reward ratio with a tighter stop-loss level. It also depends on
the market conditions. Simply wait for a retracement before order entry if the RR
ratio is low otherwise open sell order just after channel breakout.

Stop-loss level
Place stop-loss above the last higher high made by the price within the channel.

Target level of ascending channel

The first target level (TP1) should be at the level from where ascending channel
starts. Now try to draw another descending Channel on the price and close the
rest of the trade after descending Channel breakout in the bullish direction. This
makes you a patient trader.

Risk management
The minimum risk-reward ratio for ascending channel pattern is 1:1. The risk size
per trade should not be greater than 2% of the total account balance. If the risk-
reward ratio is lower than 1:1 then wait for the price to retrace and then open a
sell order until the risk-reward ratio becomes greater than 1.

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Multi-Channel strategy
According to a multi-channel strategy, a trader should trade lower timeframe
channels in the direction of a higher timeframe channel to increase the
probability of winning in a trade.

For example, an ascending channel pattern forms on a higher timeframe. Then

on the lower timeframe, look for descending channel patterns and trade the
channel breakout in the direction (bullish) of a higher timeframe.

This is the way to increase the probability of a trade setup by adding

confluences. The addition of confluences filters best trade setups from the crowd
and it is the best method to trade.

Conclusion
An ascending channel pattern is an important chart pattern you need to know to
trade with big institutions and in the direction of the trend. It doesn’t matter
what type of trading strategy you use to trade. But if you will draw channels on a
higher timeframe and then apply your strategy only in the direction of the trend
of channel then you will get a winning strategy.
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Make sure to practice ascending channel pattern properly before applying it on

a live account.

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1 thought on “Ascending Channel: Trade with Multi-Channel

Strategy”

Azeem Ahmed
May 11, 2022 at 7:41 am

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6/14/23, 8:20 AM Ascending Channel: Trade with Multi-Channel Strategy - ForexBee

Salam
Sir I need complete pdf book of these all patterns with details..
I downloaded one pdf book but it is only with pictures
I need in details .please send at [email protected]

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