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 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 breaking out from a nice base, price pulled back to retest its former highs. During the recent correction, it briefly undercut this level of former resistance turned support. But buyers quickly stepped in to defend this level, resulting in what appears to be a shakeout for now.
It’s also important to note that momentum has been waning and just barely tagged oversold conditions during the recent selloff. But we’re currently seeing a potential bullish divergence in the 14 period RSI.
So, the question here is simple: Was this a false start or a failed breakout?
In the former scenario, buyers should have the power to hold price above this key level, in which case we’d anticipate another leg higher soon.
But if the latter is to be true, and this is a failed breakout, sellers should take control here and knock prices back below this critical level.
Let us know what YOU are doing… Buying, Selling, or Waiting it out?
Tweet me at @Sstrazza or shoot me an email at firstname.lastname@example.org.
And as always, check back in a few days to find out why this chart is relevant.