From the desk of Steven Strazza @Sstrazza
Check out our latest Mystery Chart!
What we do here is take a chart that’s captured our attention, and remove the x and y axes as well as any other labels that could help identify it.
This chart can be of any security, in any asset class, on any timeframe. Sometimes it’s an absolute price chart, other times it’s on a relative basis.
It might be a ratio, a custom index, or maybe the price is inverted. It could be all three!
The point is, when we aren’t able to recognize what’s in front of us, we put aside any biases we may have and scrutinize the price behavior objectively.
While you can try to guess the chart, the point is to make a decision…
So, let us know what it is… Buy, Sell, or Do Nothing?
Here’s this week’s chart:
The first thing that jumps out is that price just pierced through the upper bounds of a big basing pattern but quickly failed and reversed back into its old range.
Although the bullish momentum regime (as measured by the 14-period RSI) remains intact, momentum has been waning as price has made new highs for some time now. The result is a massive potential bearish divergence as price challenges a critical level of interest.
So, what do we think comes next:
Is this a potential failed breakout, and prices are on the verge of reversing hard to the downside??
Or is it just a false start and pause before price breaks out and kicks off a fresh leg higher?
Let us know what YOU are doing: Buying, Selling, or Sitting It Out?
Tweet me at @Sstrazza or shoot me an email to firstname.lastname@example.org.
And, as always, check back in later to find out why this chart is relevant.