Monday, April 13, 2009

It's Go Time.

This is not a Dow chart that inspires confidence. I'm long overdue on posting what Elliott Wave analysis is forecasting (near-term bullishness), but simple charts are hard to argue with. Typically, an ascending triangle pattern such as this - note the straight line across the top near the 8100 mark and the rising trendline of support - tips a bullish signal. However, the divergences (noted with my white markings) between new short-term trend price highs and 1) lower momentum, 2) lower volume, and 3) Relative Strength that can't break its resistance with these highs are not feel-good signs. Additionally, these are atypical of reversal patterns, so it further clouds the signal.

Since price has reached the apex of this trading range, it looks like a breakout is near. Should price break to the downside, legitimate support seems to be forming around 7750 where the 20 day and 50 day moving averages are converging (and rising).

No comments:

Post a Comment