Darvas Box
Draws price consolidation boxes; a break above the top box is a momentum entry, below the bottom an exit.
How to read it
The Darvas Box draws a rectangle around a consolidation — its top is the recent high that held, its bottom the low that held. As long as price stays inside the box the market is ranging; the box waits for price to break out of one side.
Trading signals
The breakout is the trade: price closing above the box top is a long (a new box then forms higher), closing below the bottom a short. The opposite edge of the box is a natural stop. It works best in trending markets where boxes stack in the trend's direction.
Parameters
Darvas Box Length sets how many bars define the box's high and low. A longer length builds wider, more significant boxes with rarer breakouts; a shorter one reacts to smaller consolidations.
- Darvas Box Length
- Bars used to detect each box's high and low.