Trends/Trendlines and channels

Descending channel

Two parallel lines sloping down, with price moving back and forth between them while it falls.

Trendlines and channelsBest on 3M, 6M, 1YAlso called falling channel, down channel

Illustration of the descending channel shape. It is a sketch, not real price data.

What it shows

A descending channel has a falling upper line through swing highs and a parallel lower line through swing lows. Price zigzags between them while the whole lane moves down.

The width of the channel shows how large the swings are. The lower line is a parallel copy of the upper line.

How we find it

The same code that draws it on your chart follows these steps, with the same result every time.

Fit a falling line through at least two swing highs.
Draw a parallel line through the lowest swing low between those highs.
Count touches on both lines within the tolerance.
Keep it only if no close fell outside the channel by more than the margin.

Starting values: Tolerance 1.0% of price; Minimum touches 2 high, 2 low; Minimum length 20 bars. These are proposed and will be tuned on real price data before launch.

How to read it

Upper line touches are rallies that turned back down.
Lower line touches are drops that turned back up.
The position between the lines shows how close price is to either edge.

Status labels you may see

Label	What it means
Inside the channel	The last close is between the lines.
Near the upper line	Within 2% of the upper line.
Near the lower line	Within 2% of the lower line.
Closed outside	Past either line.

What cancels it

A close above the upper line or below the lower line.

What traders check next

Whether the rallies inside the channel are getting weaker or stronger.
Whether volume changes near the edges.
Whether a longer period shows a steeper or flatter channel.

Limits

The lower line is a copy of the upper line, so it can miss real lows.
Short channels look neat by chance.
A steep drop in a channel can stop without warning.

Try it in forecastviz

Open any ticker and choose Trendlines and channels → Descending channel in the left menu.
Switch between 3M, 6M, 1Y to see how the picture changes.
Compare with Ascending channel and Horizontal channel on the same chart.

Open on a ticker

Questions

Is it the mirror image of an ascending channel?

Yes. Everything is the same except both lines slope down.

Does price always stay inside?

No. Closes outside the lines happen, and that is when the channel is marked as broken.