SIDEWAYS STOCKS – What Are They And How To Find Them

The sideways stock price pattern is where Tactical Trading performs best, delivering substantially higher returns than a buy-and-hold strategy.

A sideways pattern occurs when, over the selected timeframe, a horizontal price channel is formed. This formation is caused by the highest highs and the lowest lows staying roughly the same distance apart. Stock prices appear to meander inside the channel, traveling from the lower bound to the upper bound and back repeatedly.

More often than not, these sideways channels are found during periods of price consolidation which often follows a significant up-move or down-move. These consolidation periods can last a few days to several weeks or months. They are typically followed by a breakout or breakdown in price.

A charting tool to use when looking for sideways patterns is Bollinger Bands. Also, Average True Range (ATR) works well to identify periods where the ATR is staying around the same value. Another clue will be declining volatility, followed by volatility stagnation.