Mystery Chart (09-01-2020)

Steve Strazza
September 1, 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?

We're hoping this week's chart will be a bit more challenging than usual.

No beautiful base breakout, no clearly-defined risk, no bullish momentum characteristics... Just an unusually long continuation pattern with an upwards bias.

Let's have a look.

Click on chart to enlarge view.

On second thought, maybe it's not a continuation pattern at all.

Based on the textbook definition of a flag or pennant, the flagpole that precedes the consolidation should be greater in length than the consolidation itself. Additionally, the consolidation should only last a few months, tops.

That's not what's happening here at all. Price has been coiling for three months, which is far longer than the two-month average duration of these patterns.

Another reason why we might not want to consider this a continuation pattern is because flags and pennants tend to have a neutral or negative slope.

The positive slope and upwards bias of this chart puts us in the camp that this is most likely a rising wedge and not a pennant. And unlike flags and pennants, that's a bearish reversal pattern.

So, let us know what you think.

Is this pattern bullish or bearish?

Is this a pennant or a wedge?

Are we buying or selling this chart right now, or waiting for more information?

We want to hear 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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