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 on chart to enlarge view.
Textbook technical analysis tells us that rounded tops like this one typically resolve lower. And considering the two equal highs almost to the penny, this is also a potential double top which pattern fans know is a popular bearish formation. But before the pattern confirms and suggests further downside price would need to break its low between the two highs, which it has yet to do.
But don’t expect it to break easily as prices have already made several near-term lows here and continue to find support at this level.
So, considering the bullish momentum divergence and most recent successful test of support, maybe this is just a continuation pattern within an underlying uptrend. I’m inclined to lean this way and expect prices to dig in here and head back towards the upper end of their range.
Tweet me @Sstrazza or email email@example.com and check back on Thursday to find out why this chart is relevant.