What are CM Channels?
A Chartmill Channel is a horizontal channel wherein prices move sideways. The top side (red) is called the Upper Chartmill Channel (UCC), whereas the bottom side is called the Lower Chartmill Channel (LCC).
This channel doesn’t – in contrary to the well known donchian channels – require extra parameters. Chartmill channels automatically calculate the most optimal value by looking for an optimum between “as long as possible” and “as small as possible”. In that way, channels can be more objectively defined.
When and how CM channels are best used?
CM Channels are primarily developed to detect break outs in sideways (accumulation) phases . By maximizing length and minimizing height, Chartmill Channels are powerful stuff to hunt for stocks which are building up lots of energy before breaking out of a long accumulation phase.