Mystery Chart (02-03-2021)

Louis Sykes
February 3, 2021

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

New Mystery Chart!

For those new to this 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.

 

So what are we thinking?

Is this a massive base that's about to explode higher, or is this screaming another top?

One could argue that because price breached the upper level of this range and was confirmed by an overbought reading, the breakout should be valid and is unlikely to fail.

Sounds logical in theory, but markets are designed to fool investors. They don't act logically. Markets aren't practical at all. In fact, their default state is wildly irrational.

At the same time, despite the overbought reading, momentum is really waning of late, even nearing oversold conditions on a recent sell-off.

Is this overhead supply just too much for buyers to take out on their first attempt?

Are we looking at a sustained breakout or is price about to fail at these key former highs? These are the two scenarios playing out in our heads.

But, we want to know how YOU are seeing this chart.

Let us know your thoughts by tweeting me at @Sstrazza or by email at strazza@allstarcharts.com and check back later in the week to find out why this chart is relevant.

Allstarcharts Team
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