Mystery Chart (10-13-2020)

Steve Strazza
October 13, 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 Chart to Enlarge Image.

We're looking at a nice base which after resolving to the upside was followed by a significant rally higher. If I were to zoom out, it would be very clear that the structural trend has been up for a long time despite the consolidation that preceded the recent breakout.

Price has been grinding higher and digesting its gains constructively right around our Fibonacci extension levels. This brings us to today, where price is currently at all-time highs and looks ready to give another go at its most recent objective near the 423.6% extension.

Although, we want to be cautious of the potential bearish momentum divergence at the recent highs. We don't care about divergences until they are confirmed. In order for confirmation to occur price would have to fall below the high that corresponded with the high in momentum. Even through the recent selloff, price never violated this level.

So, the question that remains is whether or not price eventually catches lower and confirms the current divergence... Or, does momentum finally catch up with price and make a new high as well?

The answer to this question is likely to be the same as whether or not you want to sell or buy this chart here.

Which will it be?

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

Tweet me your thoughts @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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