Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
A channel is a trend with a parallel boundary. In a rising channel, demand lines the lows and a parallel line marks the highs. A falling channel does the opposite. A flat channel is a rectangle. The channel says the swing size is stable.
How to identify it
Two parallel lines, each touched at least twice. Parallel is the requirement. If the lines converge, it is a wedge. If they diverge, it is a megaphone.
Bullish reading
In a rising channel, buys are considered near the lower line only while the line holds, with the line as invalidation. A close above the upper line can be a blow-off or an acceleration. Do not assume it is bullish just because it broke up.
Bearish reading
A close under a rising channel's demand line is the warning that the trend rhythm broke. In a falling channel, rallies into the upper line are the classic sells, with risk above that line.
Common mistakes
Forcing a parallel line when the second boundary only touches once. One touch is a parallel you imagined.
Limitations
Channels look cleaner in hindsight. The lower line moves every time you get a new low. Trade the line you had before the touch, and accept when price no longer respects it.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.