Mystery Chart (04-07-2020)

Steve Strazza
April 7, 2020

From the desk of Steve Strazza @Sstrazza

New Mystery Chart!

For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it’s a custom index or inverted, who knows!

We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.

You can guess what it is if you must, but the real value comes from sharing what you would do right now. Buy, Sell, or Do Nothing?

Here’s this week’s chart.

Click on the chart to enlarge view.

Similar to last week's Mystery Chart, we're looking at another long-term downtrend. The major difference is that last week we saw prices bounce off support while in the chart above, potential support was just violated.

Price has made lower highs and lower lows since its initial peak and just broke down further, undercutting its most recent lows.

Momentum is in a bearish regime and prices are below multiple levels of strong overhead supply, making anything more than a counter-trend move unlikely.

But, momentum is also printing a potential bullish divergence as the RSI-14 just made a higher low despite the lower low in price.

So, this is likely to go one of two ways in our opinion...

  1. An epic failed breakdown in which case prices rip back above their prior lows and confirm the momentum divergence.
  2. A sustained breakdown in which case we are likely to see follow-through towards record lows.

Which one do you think it is?

Tweet me @Sstrazza or email me at strazza@allstarcharts.com and check back on Thursday to find out why this chart is relevant.

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Allstarcharts Team.

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