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Popular Screens 7: Finding narrow trading ranges using Chartmill Channels

If you’re a typical breakout-trader you will definitely like the next ChartMill screener configuration. We will show you how to find those stocks where price is stuck in a very strict trading range. The first step is to open our stockscreener page. First, you open the tab ‘stockscreener’ on the ChartMill homepage. Make sure you are logged in. If you don’t have an account yet, click here for a free basic account (no strings attached…).

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Once you’re in the stockscreener you select ‘Support/Resistance/Channels.

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In the next screen there are a whole lot of filters. Because our goal is to identify stocks in small trading ranges we are combining 7 different filters. That’s a pretty strict selection as you can see in the following screen.

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These are the filters we applied:

  • UCC : Upper Chartmill Channel : This is the upper line from the indicator ‘Chartmill Channels’ (more documentation in this link) which acts as a resistance line. ‘Close 3% from UCC means that the stock price is only 3% or less away from that resistance level.
  • UCC Length : the length of the upper channel. In this example we’ve selected ‘> 20’ which means that the upper chartmill channel exists at least for 20 periods or more (‘periods’ on a daily chart are days, on a weekly chart a period is one week… )
  • UCC Strength : The number of times the stock price was in the immediate vicinity of the resistance level (in this case the UCC). In the example we chose ‘>3’, so price has already ‘bounced’ 3 times from the UCC.
  • For ‘LCC’, ‘LCC Length’ and ‘LCC Strength’ the explanation is exactly the same with only one difference, resistance becomes support. LCC stands for Lower Chartmill Channel.
  • Finaly we add one last filter, called ‘CC Width’ which defines the maximum width of the channel in percentage. In this case we selected a maximum with of 5%

Combining these different UCC and LCC possibilities leads to a stock price which is at its most 3% away from the next identified support and resistance zone. The overal maximum width of the channel is limited to 5%.

Running this screens results in about 400 results. There are a couple of filters that we can add to narrow this down:

  • An average volume of at least 500K ensures that we only have liquid stocks in our results.
  • A minimum price of 5 avoids penny stocks.
  • A minimum ATR of at least 1% filters outs dead stocks. Some stocks seem to be in a tight range, but they are not moving anymore. Typically this happens after a merger deal.
  • A minimum Chartmill Technical Rating of 7 makes sure that we have only stocks which are technically solid. ( Showing a strong uptrend )

You are of course free to experiment with all of these settings and adjust them to your personal trading preferences. Use this link to dive in to the fully configured screen.

Some examples straight out of the stockscreener with the filters mentioned above…

Running this screen today, on the 23rd of April 2017 includes these results:

ATVI

Trading idea : long above 50 with a stoploss below 48…

ALB

Trading idea : long above 107.60 with a stoploss below 102.5

When you click the charts it will take you to a full analysis in our analyzer. It should be no surprise that also the analyzer recognizes these as good setups. You can also find a concrete trade suggestion on the analyzer pages.

Finally, note that the results of this screen will change on a daily basis …. as stocks tend to move ;-)

TIP : Use our proprietary Position Sizing Tool to calculate how many shares you should buy!