Price near floor of rising trend

Rising trends indicate that the company experiences positive development and increasing buy interest among investors. Stocks in rising trends signal a further increase within the trend channel.

When the price is near the support of the trend channel floor, there is a large upside to the trend channel ceiling. The opportunity is there to make good purchases, if the trend development continues.

At the same time, the risk of a break downward is greater than when the stock is in the upper half of the trend channel. A break downward is not a sell signal, see the help item Rising trend breaking downwards, but the stock will be assessed as less positive than when the price is inside the trend channel.

Hence it is not obvious that it is better to buy a stock near the floor of a trend channel than to buy when it is in the middle or top of the channel.

In Investtech’s analyses, stocks in rising trends are counted as equally positive regardless of whether the price is near the floor, near the ceiling or in the middle of the trend channel. A stock is classified as “near trend floor” if it is in the lower fifth of the trend channel.