The Handbook of Technical Analysis + Test Bank_ The Practitioner\'s Comprehensive Guide to Technical Analysis ( PDFDrive )

Envelopes and Methods of Price Containment

Figure 12.29 depicts the same multicollinearity for downside breakout signals

on the price channel.

The next example depicts a standard 20‐period breakout channel in action. It

should be noted that channels work best in stronger trends. In Figure 12.30, we

see a channel experiencing losses in ranging action and profiting during trends.

Figure 12.29 More Multicollinearity on the Daily Chart of Google Inc.

Courtesy of Stockcharts.com

Figure 12.30 20‐Period Channel Action on the Daily Chart of Google Inc.

Courtesy of Stockcharts.com