Darvas boxes: support, resistance and how traders use them

7 min read•Updated on 2 Nov 2026•by GeniAnalysis

What Nicolas Darvas did with his boxes, the rule behind the top and bottom, and how traders use them for entries, stop-losses and trailing stops.

Prices rarely move in a straight line. They rise, stall, move sideways inside a band for a while, and then leave it. A Darvas box marks that band with a fixed rule. The top of the box works as resistance, the bottom as support, and the method is built around what happens when price leaves the box.

Who Darvas was

Nicolas Darvas was a professional dancer who traded American shares in the 1950s while touring the world. He could not watch the market during the day. He followed his shares through daily price quotes sent by telegram, and placed his orders with his broker in advance.

That constraint shaped the method. He needed rules that worked on daily prices, that told him in advance where to enter and where to get out, and that did not depend on watching every move. He described the approach in a book published in 1960, after his trading had made him a well-known name.

The idea: price moves in a series of boxes

Darvas noticed that a share in a strong uptrend does not rise every day. It moves up, pauses, and swings inside a range for some days before moving up again. He pictured each pause as a box sitting on top of the previous one, like a stack.

• The top of the box is a level the price has failed to get past for a few days. That is resistance.
• The bottom of the box is a level the price has stopped falling below. That is support.

As long as the price stays between the two, nothing has changed. What matters is the day it leaves.

How the top and bottom are set

The usual rule uses three candles to confirm each edge. Darvas worked with daily prices, so for him that meant three days.

1. The top (resistance). Take a high. If the next three candles all fail to make a higher high, that high becomes the top of the box. If any of them goes higher, the new high becomes the candidate and the count starts again.
2. The bottom (support). After the top is set, follow the lows. Each new lower low becomes the candidate. When three candles in a row hold above it, that low becomes the bottom of the box.
3. A higher high first. If the price goes above the top before the bottom is confirmed, the box was never complete. The search starts again from there.
4. The box ends when a candle closes outside it, above resistance or below support.

The edges come from highs and lows, but the box ends on a close. A candle that pokes above the top during the day and closes back inside does not count as a break.

A worked example

Here are eight daily candles from a share trading around ₹1,000. Candle 4 has just made a new high of ₹1,100.

Resistance. Candles 5, 6 and 7 all stay below ₹1,100. After candle 7, the top of the box is ₹1,100.

Support. The lows after the top go 1,030, 1,010 and 1,000, each lower than the last. Candles 8, 9 and 10 then hold above ₹1,000. After candle 10, the bottom of the box is ₹1,000.

The box runs from ₹1,000 to ₹1,100. Its height is ₹100, 10% of the support level.

The break. Candle 11 closes at ₹1,120, above resistance. In the language of the method, the price has broken out of the box upward.

Had candle 9 reached ₹1,105 instead of ₹1,070, no box would have formed. The higher high would have become the new candidate top.

How Darvas used the boxes

Darvas used the boxes for three decisions: when to enter, where to cut a loss, and when to get out of a winning position.

Entry. He placed a buy order just above the top of the box, so it would execute only if the price broke through resistance. In the example, that is an order a little above ₹1,100. He did not buy inside the box, and he did not try to buy near support in the hope of a bounce.

Stop-loss. At the same time he placed a stop-loss order just below the bottom of the box. In the example, a little under ₹1,000. If the break failed and the price fell back through support, he was out with a loss he had decided in advance. He treated small losses as the cost of the method, and cut them without waiting.

Trailing the stop. If the break worked, the price would rise and, sooner or later, pause again. That pause forms a new box above the old one. Each time a new box formed, he raised the stop-loss to just below the new box's bottom. The stop only moved up, never down. A position stayed open as long as the boxes kept stacking up, and closed when a box failed and the price fell through its support.

So a trade had a planned entry, a planned maximum loss, and an exit that followed the trend instead of a fixed profit target.

His filters

Darvas did not apply the boxes to every share. Two filters came before the box:

• Price near a new high. He looked for shares trading at or close to new highs, on the view that a share already making highs has no resistance left above it from earlier buyers.
• Unusual volume. He paid attention to shares where trading volume rose well above normal, and treated a break on heavy volume as more meaningful than one on thin trading.

Later he added a third: he preferred companies in growing industries whose earnings were rising. He described himself as combining the technical picture with the business behind it.

Support and resistance after the break

Once the price closes above a box, many traders watch the old top as support. In the example, ₹1,100 was resistance while the price was inside the box. After the break, a fall back towards ₹1,100 is often watched to see whether buyers step in at the level that used to cap the price.

The same works in reverse. A close below support turns the old bottom into a level traders watch as resistance on any rise back towards it.

This is a common way of reading charts, not a rule the market follows. Old levels sometimes hold and often do not.

How traders use Darvas boxes today

The method is used well beyond American shares in the 1950s. Traders apply it to Indian stocks, indices and futures, on daily charts and on intraday timeframes. A few practical points come up again and again:

• Timeframe. Darvas used daily prices. On a 5-minute chart, three candles are fifteen minutes of trading, so boxes form and break far more often. Shorter timeframes produce more boxes, more breaks and more failed breaks.
• Box height. A narrow box gives a close stop-loss but is easily broken by ordinary noise. A tall box gives the trade room but puts the stop further away. Traders usually look at the box height as a percentage of price before deciding whether the distance to the stop is acceptable.
• Confirmation count. Some traders use more than three candles to make the boxes sturdier. More candles mean fewer, wider boxes and fewer false breaks, but later entries.
• Sideways markets. The method needs a trend. In a market that swings back and forth without direction, boxes break up and down repeatedly, and each failed break costs the stop-loss.
• Gaps. A stop-loss order below support protects only if the price trades through it. A share that opens far below support after bad news can fill well below the stop.

On GeniAnalysis

Switch on Darvas boxes from Indicators, under Volatility, on any chart and timeframe.

• Each box is drawn from the candle that set its top to the candle that closed outside it.
• Boxes the price has left are green if the closing candle was above resistance and red if it was below support.
• The open box, the one the price is still inside, is shaded more strongly, has a dashed line at its midpoint, and shows its height as a percentage. Its resistance and support are marked on the price axis.
• The legend shows the top and bottom of the box under your cursor, or the last box that formed.

To be told when the price reaches the box top or bottom, set a price alert at that level: right-click the price on the chart.

What a Darvas box does not tell you

A Darvas box marks where the price paused below a high and where it stopped falling afterwards. That is all it measures.

A close above resistance is not a forecast that the next box will be higher, and a close below support is not a forecast that the next one will be lower. Many breaks fail and the price comes straight back into the box. Darvas planned for that with a stop-loss on every entry; the box itself does not prevent it.

The edges are one candle's high and another candle's low, chosen by a counting rule. Change the count or the timeframe, and the boxes change with them.

Related

• Previous day high and low: why the levels get watched
• Open gaps: price the market never traded
• Fair value gaps, and how they differ from open gaps
• Price alerts that fire on the tick