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How to scan for stock with price moving sideways while OBV is increasing
Hi, I'm a long time stockcharts.com user and very comfortable with charting tools but inexperienced at stock scanning.
Can someone give me pointers on how to scan for a stock with price that has been moving sideways while On Balance Volume (OBV) is increasing?
If a stock is moving sideways, then longer term price channels should not show a rising upper channel or a falling lower channel (in other words, it's not making new prices in either direction). But the upper channel can fall and the lower channel can rise as the channel's time frame expires.
For instance, in a 63 day channel (three months, or one quarter), if 64 days have passed since the last high price, the upper channel will drop to the next lower high. Similarly, the lower channel would eventually rise to the next higher low.
So, while prices are ranging (moving sideways) the upper and lower price channels for the selected time frame should be running parallel or converging.
So your scan would would compare today's upper price channel value to the same value some number of days ago, and today's value should be equal or less than the prior value.
Likewise for the lower channel, except the current value should be equal or greater.
The trick is to select channel parameters that will catch the kind of situations you are looking for. That calls for a little trial and error research.
For OBV, you would probably want to test the starting and ending value over the same time frame.