Mystery Chart (08-18-2020)

Steve Strazza
August 18, 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.

After making fresh record highs, price has been consolidating in a tight flag pattern over the past month.

Click on chart to enlarge view.

Momentum barely hit overbought to confirm the new highs, and has since rolled over and diverged as price has made new incremental closing highs in recent weeks. Is this a cause for concern?

What we really want to know is whether or not investors are buying or selling these kinds of short-term continuation patterns right now.

Based on the charts we're looking at, more and more of these bullish patterns continue to resolve higher. Do we assume the others will follow and buy them here, or wait and buy the breakout?

Or do we want to fade some of these setups, particularly those showing weak momentum and relative strength?

Let us know what you think. We love hearing from you.

Tweet me @Sstrazza or email strazza@allstarcharts.com and check back at the end of the week to find out why this chart is relevant.

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Allstarcharts Team

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