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Chart Lesson: 3
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When markets continue in the same price direction for some time, with parallel highs and lows, they are said to be in a channel. There are two rules for channels:
- The market is expected to find resistance and support at the channel boundary lines, bouncing back toward the other channel line.
- On a breakout of a channel, prices will attempt to establish another channel parallel to the first, thus "doubling the channel".
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