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9.2 Darvas Boxes

Darvas boxes by Nicholas Darvas are a system of drawing boxes on certain trading ranges, with a view to trading breakouts up or down from them.

The top of a box is formed when the high of day 1 is not penetrated on the immediately following day 2 and day 3. The bottom of the box is established similarly when a low is not penetrated on two subsequent days. The first candidate low is the low of day 3, and the search for a low can extend indefinitely. If the box top is penetrated while looking for the low then the box is abandoned.

Boxes in Chart are drawn without sides, only top and bottom, so as not to obscure the price plot. The starting point for box finding is the start of all data in the database, which attempts to make the results consistent, though it’s still not deterministic in the worst case, since it’s never certain there can’t be a huge enclosing box back in past data.

Copyright 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2014, 2015, 2016, 2017 Kevin Ryde

Chart is free software; you can redistribute it and/or modify it under the terms of the GNU General Public License as published by the Free Software Foundation; either version 3, or (at your option) any later version.