Technical analysis of stocks depends on interpreting patterns in price charts in order to decide how to play a stock.
One pattern, in particular, is pretty common and profitable.
It’s called an “upward channel.”
An upward channel basically means that the price of a stock is
bouncing back and forth between resistance and support levels, while
generally trending upwards.
Prices don’t always stay exactly within the lines, but they’re still
great indicators of when to either go long or short with your
Here’s an example using Chevron Corp. (NYSE: CVX), which demonstrates this pattern beautifully.
A Clear-Cut Case
By following the upward channel trend shown on the chart below, you can get a better idea of when to buy and sell.
The red line represents the resistance level – the price at which the
stock finds more selling pressure than buying pressure. When CVX hits
that line, it’s probably a good time to short the stock. (more)
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