Channels can be found by drawing trend lines. The support and resistance trend line MUST be parallel to eachother to be valid channels. Channels give us an idea of the "trading range", if a channel has bounced off the bottom at least 2-3 times and the top 2-3 times, it is relatively safe to buy the bounce of the support the 3-4th time and sell once it reaches resistance. The lower trend line is a buying area and upper trend line is a selling area, but they must be tested some times (2-3) to be proven valid and a safe trading opportunity. We usually use tight stop losses, about 5-7% under our entry and below support level, as channels can break out and have significant downside / upside movements. If a channel breaks on the upside, it usually retests the top resistance as support, and proceeds to rally upwards. This is usually a good trading opportunity. Once you see the price bounce off previous channel resistance (now support) and begin to move up with some volume, you can enter a trade in a relatively safe manner.