1. A stock is making a new 52-week high

2. After the high is set, there are three consecutive days that do not exceed the high

3. The new high becomes the top of the box and the breakout point leading to the new high becomes the low of the box

4. Buy the break of the box once it exceeds the high by a few points

5. Sell the low of the box if it is breached

6. Add to your position as it moves into each new box

• At some point all new highs experienced the Darvas Box Theory

• As always, any broken resistance will act as support and any support broken will act as resistance

• Use the Daily and Weekly charts to find areas of consolidation using the Darvas Box Theory

• If the box/zone should break, we would now treat it as resistance.

• By simply running through each chart and boxing any areas of consolidation, we can look for bounces in and out of these areas or use them as profit taking points or stop losses.

• I often use this idea more than supply and demand zones as it typically offers several points of support or resistance versus a singular instance.

• But, remember, the reason things bounce is because of hedge funds that have large buy and sell orders; once these are exhausted price could continue in that direction. So the more times a zone is hit, the less likely it might bounce in the future.

• Another great take on the Darvas Box Theory and Supply and Demand zones is the Volatility Contraction Pattern