A Darvas box forms when a stock trades in a tight range after a significant advance. Breaking above the box high with volume signals continuation. Ride the next leg up until a new box forms at a higher level.
Indicators Used
Donchian ChannelVolume
Rules
📈 Box Break Long
- Stock has made a 52-week high recently
- Price now consolidating: new high, then pullback, holding range for 5-15 days
- Box high = recent 52-week high; box low = recent pullback low
- Volume contracts during box formation (consolidation)
- Wait for close above box high on volume surge (>1.5× avg)
- Enter long on breakout day close
- Stop: at or just below box low
- Trail stop up as new boxes form at higher levels
52-wk high
Required
1.5× vol
Breakout
💡 Pro Tip
Darvas' original rule: only trade stocks making new 52-week highs with strong earnings. This is not a mean-reversion or oversold strategy. It's pure strength-on-strength. Filter for momentum stocks, not value plays.