Trendlines and Chanels

Technical Pillar | Spoke 2 | Updated April 2026

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BR

Authored by Brian Rosemorgan

Retired Professional Trader | 8+ Years Experience | South Africa

Trendlines & Channels: Trading with the Momentum

Trendlines are diagonal support and resistance levels. They don’t just show where the price is; they show how fast it’s getting there. In a healthy trend, price stays within a Channel. When price breaks the channel, it usually signals a major trend reversal or a period of consolidation.

1. How to Draw “Professional” Trendlines

Amateurs try to force trendlines to fit the current price. Professionals let the price dictate the line. Follow these three rules:

  • Two Points for a Line, Three for a Trend: You can connect any two points, but a trendline isn’t “confirmed” until the market reacts to it a third time.
  • Don’t Cut Through Candles: Your line should touch the wicks (the extreme highs/lows). If you have to cut through the body of a candle to make the line work, the trendline is invalid.
  • Watch the Angle: The most sustainable trends move at roughly a 45-degree angle. If a trendline is too steep, it’s a “parabolic” move that will likely crash.

2. Channels: The “Trading Corridor”

A channel is formed by drawing a trendline and then placing a parallel line on the opposite side of the price action. This creates a clear “Value Zone.”

Channel Type Market Condition Strategy
Ascending Bullish Trend Buy at the bottom (support) line.
Descending Bearish Trend Sell at the top (resistance) line.

3. Beware: The “Third Touch” Trap

This is where most South African beginners lose their first deposit. The “Third Touch” is where the most liquidity sits, and it’s where institutional “Stop Hunting” occurs.

🛑 How to Avoid the Trap

Don’t place a blind Limit Order on the third touch. Instead, drop down to a lower timeframe (like the 15-minute) and wait for a rejection candle. If the price pierces the line and then closes back above it, the “trap” has been sprung and it’s safe to enter.

Brian’s Pro-Tip: “In the ZAR market, I often see trendlines get ‘over-extended.’ If the USDZAR has been riding a trendline for months, the break is going to be violent. When a long-term trendline breaks, don’t try to catch the falling knife. Wait for the retest of the trendline from the under-side before looking for a reversal trade.”