We identify a directional trend and draw a trend line joining points of support where the market could not move lower. From here we can draw a channel line parallel to the support line which joins points of resistance where the market found it hard to move higher.

 

Markets will often find resistance at certain levels where participants are not willing to pay higher prices. However, once the market accepts these higher prices, these levels form future support and the market is unable to cross back below, and instead moves higher to the next resistance.these support and resistance levels are often drawn more horizontally.