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:
There is no shortage of mixed signals out there right now and the above chart is an excellent example of just that.
So, what are we dealing with here?
The first thing that jumps out is the strong primary uptrend… which is then followed by a prolonged period of consolidation.
These bullish continuation patterns shouldn’t look at all unusual as many charts look similar to this one these days with many of the major stock averages and other risk assets trying to reclaim key prior highs.
But, just how bullish are they?
Well, that depends on each individual chart. And in the case above, we have strong momentum characteristics confirming the new highs as RSI-14 is not only in a bullish regime but is currently in overbought territory… yet again.
Also notice how momentum didn’t hit oversold during the recent corrective action. This also goes a long way in validating the strength of this uptrend and supports a potential breakout above this resistance level… If and when we get it!
So, our question is simple:
Do buyers have what it takes to make this a decisive upside resolution?
Or is there still enough supply at this level to act as resistance and keep a lid on prices at these key former highs?
And as always, we can sit on our hands and wait for more information too.
So, 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!