Another channel worth watching right now is the horizontal consolidation channel that's been reigning in price action in shares of Ecopetrol ( EC). Unlike the channel up, a sideways consolidation channel doesn't have any directional bias -- that's why I like to refer to them as "if/then trades."

Because price movement is sideways, it doesn't make sense to take a position while shares trade within the channel. Instead, it's best to wait for a breakout in either direction -- here's where the if/then element comes in. If shares break above resistance, go long; otherwise, if shares tumble through support, this becomes a short play. Either way this trade pans out, consider a protective stop just inside the channel.

To see these plays in action, check out the Technical Setups for the Week portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.


Follow Stockpickr on Twitter and become a fan on Facebook.
At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on

If you liked this article you might like

Market Recon: This Is the First Time Markets Noticeably React to White House Trouble

Here's the Rundown on Synopsis: Ride the Momentum After Blowout Quarter