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In the context of trading, "parallel channel breakdown" refers to a specific technical analysis pattern observed on price charts. Here's a detailed explanation:
Parallel Channel in Trading
A parallel channel is formed by two parallel trendlines that act as support and resistance for the price movements of an asset. There are two types of parallel channels:
Ascending Channel: The price trends upward, with higher highs and higher lows.
Descending Channel: The price trends downward, with lower highs and lower lows.
Breakdown of a Parallel Channel
A breakdown occurs when the price moves outside the lower boundary of the channel (in a descending channel) or the upper boundary (in an ascending channel), signaling a potential reversal or continuation of the trend.
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