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.
Albemarle Corporation ALB
Albemarle shareholders have had a bumpy ride in 2015, but the stock appears to be finishing the year on a high note. Its breakout above its price channel also represents its highest trading level since mid-summer.
Dr Pepper Snapple Group Inc. DPS
Dr Pepper Snapple has been on fire in the second half of 2015, and the stock shows no signs of slowing down in the near future. Its recent price channel breakout has once again taken the stock to new all-time highs, an occurrence that shareholders are quite used to in recent months.
American Electric Power Company Inc AEP
American Electric shareholders are hoping that the current push is the one that takes the stock back up to test its 52-week high at around $63. Previous pushes in August and October topped out in the $58-$59 range.
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Disclosure: The author holds no position in the stocks mentioned.
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