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.
Unlike the Mystery Charts from recent weeks which have been mostly structural downtrends, today we’re finally looking at a long-term uptrend.
Higher highs and higher lows… At least until recently, as this uptrend is currently at an important inflection point.
Price peaked not long ago and saw an accelerated move to the downside before finding support at key former resistance. This came just after it violated its rising trendline which was successfully defended several times and now looks likely to be retested from below.
A bullish momentum divergence also formed at the recent lows which helped fuel the rally off this well-tested level and was just confirmed by price.
In our view this chart is in a bit of “no man’s land” with price currently smack in the middle of its recent high and low, giving us no concrete level to define our risk against.
We’ll give you a hint today… The chart is NOT inverted and IS in the equity space.
Let us know what you’d be doing here and whether or not this impacts your decision!
Tweet me @Sstrazza or email me at email@example.com and check back on Thursday to find out why this chart is relevant.