Mystery Chart (06-22-2021)

June 22, 2021

From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge.

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:

After a clean breakout from a bullish basing formation, price is currently pulling back and retesting former resistance at its key prior highs.

Meanwhile, momentum (as measured by 14-period RSI) has been waning for some time now, leaving us with a nasty potential bearish divergence. It's also worth noting that momentum was unable to achieve overbought to confirm this breakout to new highs.

Considering these developments, it should come as no surprise to see price flush lower right back to its breakout level… HOWEVER, momentum is fighting to remain in a bullish regime and so far has avoided oversold conditions… at least for now!

So, our question with today's chart is simple:

Do we want to make the bet that buyers win out and defend the current level? In this case, price should rebound off this support zone and continue upward, leaving us with a textbook throwback and retest.

OR should we side with the sellers and anticipate this is likely to result in a failed breakout, in which case price falls back into its former range and this chart becomes a hot mess at best?

As always, we can always sit on our hands and wait for more information too.

So what's it going to be?

Are you buying, selling, or waiting?

Be sure to check back later to find out why this chart is relevant.

In the meantime, we want to know what you think about it!

Tweet me at @Sstrazza or shoot me an email at strazza@allstarcharts.com.

Allstarcharts Team