What is a price channel?
A channel is 2 trend lines that hold price between them. The upper line joins the highs; the lower line joins the lows.
A channel can rise, fall or run flat (a range). Triangles, widening patterns and a lone line with no partner count too.
When does a close count as a breakout?
Illustrative, made-up prices. The last close sits above the upper line, inside the green band (your distance setting): Breakout.
Chart in Motion labels Breakout when the close is more than 0.1% above the upper line. That works for every channel shape, triangles, widening patterns and a lone resistance line. The 0.1% floor stops a close that only touches the line from counting.
When does a close count as a breakdown?
Illustrative, made-up prices. The last close sits below the lower line, inside the red band: Breakdown.
Breakdown is the mirror image: a close more than 0.1% below the lower line of a rising channel, a flat range, a triangle or widening pattern, or a lone support line.
2 patterns never get it: a falling channel, and a triangle with a falling upper line over a flat lower line. Both were pointing down to begin with.
Does a move during the day count?
During market hours the labels follow the live price, refreshed every few minutes. After the session they settle on the close. A spike to the day’s high or low never counts on its own.
Treat a label seen during the day as provisional.
How far past the line still counts?
The shaded bands above are your distance setting in Signal filters: 2%, 4%, 8% or 15%, or a custom value up to 20%. A close beyond the band loses the label.
- Tight: only closes still hugging the line.
- Wide: also moves that have already travelled further.
With a signal filter on, the watchlist adds a Δ% column: the distance from price to its line. Sort it to bring the closest setups to the top. Lines you draw yourself are not filtered by distance.
Which channel matters most?
The app ranks channels, shown in the channel overlay on stocks in your own lists:
- MAJOR: the longest live channel, measured by how long its 2 lines ran side by side.
- minor: any other live channel.
- dead: a channel price left more than a year ago and has not come back to.
A break of a long MAJOR channel says more than a break of a short minor one.
What to check before you trust a break
- Distance: a close just past the line is easy to undo.
- Follow-through: did the next closes stay on the same side?
- Volume: was it well above normal?
- The market: breaks are more common when most stocks move together. Market breadth shows that.
- Results: an earnings date can move price through any line.
A breakout that falls back under the upper line of a flat range, a falling channel, a triangle with a falling top, or a widening pattern can become a Rejection. The support and rejection guide covers that.
Limits worth knowing
Lines are drawn on past prices. They can be drawn badly or missed, and a label can come late or change. Breakouts fail often.
Chart in Motion does not make buy, sell or hold calls. A label describes where the close sits against a line. It is not a recommendation or a price target.
See it in the app
Each watchlist row carries its signal colour: green for Breakout, red for Breakdown, orange for Support and purple for Rejection. Pick Breakout or Breakdown in Signal filters, then open a stock to see its channel. More on the features page.