The channel tool is similar to the trendline tool, except that instead of drawing one line, it draws two parallel lines. It therefore has three anchor points: two for the initial line (just like the trendline tool) and a third for the parallel line.
To draw a channel, choose the channel tool icon:
As shown in the animation below, after you click the second anchor point, moving the mouse presents to you both the parallel line as well as dashed line exactly between the two (this is called the midline). As with any other drawn objects, you can right-click it once it is drawn to alter many of its properties and appearance.
To see what other Slopers have said about channels over the years, click the Knowledge Base link here. Here is another example: