There are countless metrics and chart indicators that technical analysts use to determine buy and sell signals in the stock market. One way to identify short-term breakouts is by using price channels.
Price channels consist of a dotted simple moving average (typically a 20-day average) and solid upper and lower boundary lines plotted above and below the dotted line. The upper and lower channel lines represent the 20-day high and 20-day low of the stock’s trading range.
A breakout above the upper boundary of the price channel represents a new 20-day high and strong bullish short-term momentum, which is what traders are always looking for in the market. Here are three stocks that have broken above their price channels this week.
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