Quote from optioncoach:
Once the chart pattern breaks out of the channel, the channel is still valid in order to follow up and determine if the breakout was a false breakout, or if there will be a pullback to the trendline which was broken on the breakout. Also it is helpful to keep the channel trendlines in place to highlight that trend against the current price movement.
In the chart above, the price brokeout and then had a nice pullback (does not have to necessarily be all the way back to the trendline but it was close here). It reversed after the pullback but has momentarily stalled. Therefore, I keep the channel in sight so that I can put this current price movement in perspective.
If the market continue to push higher then the channel needs to be looked at to see its place in the larger overall trend. Was the channel a bullish flag, i.e., pause in the current uptrend which forecasts out a measured move higher or was it simply a retracement of sorts. Keeping these patterns alive for continued study as the market moves forwards gives you a better study of what is going on and allows you to become more familiar with the price action. Since a bullish downward trending flag is a move that occurs in the middle of a trend, I would leave it on to see where the renwed uptrend stalls again for confirmation of the pattern and to find new overhead resistance points.
I remove trendlines when the market moves in such ways to make the lines no longer meaningful. TA is very subjective and is a skill derived from experience. We will each see things differently but as long as you are consistent you can use it to your advantage.
