Channels are great patterns that can be used in your trading system that have the potential to produce consistent results over long periods of time.

NCM is a fantastic stock for producing channels. In fact there has been a large down trending channel since the beginning of the year that has given many potential trading opportunities.

Using the exact same parallel lines used to line the outside edges of the channel, you can place these lines on the inside of the channel, to show a second smaller channel. This gives more potential trading opportunities again. Highlighted are all the touches that could have been possible trades.  As always we need to wait for more signals than just a touch of the trend line, but it is easy to see the stock respecting the lines as support and resistance and producing long, flowing, almost predictable lines to trade.

These are the sort of stocks that are ideal to add to your watch list. Smooth and flowing, with moves in one direction that last more than a day or two.(click to enlarge)
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