How to recognize and trade price channels: 11/4/11 Euro (M6E) example

I have only a few patterns that I look for throughout the trading week. I like to analyze the M6E and NQ on a longer term basis first, see what fundamentals / current events are impacting each instrument, then zoom into a smaller time frame chart to look for entries.

I try to recognize the following things:
- Buyer / Seller Failure: Inability to break highs / lows during price moves.
- Channels: (Bull) HH and HL, (Bear) LH and LL, (Neutral) Sideways
- Consolidation: usually signaled by failed signals in the form of a wedge.

Once I recognize, I plan the trade. I wait for certain things during certain conditions. Here is a real time example of a bull channel on the Euro and how I plan to trade what I recognized:

From the formation of higher highs and higher lows, there is a little bit of a higher probability to buy the lows of the channel rather than short the highs. If you are going to short the highs, be very protected with your stop. Possible level to short would be around 1.3800 IF buyer failure is present.