Mystery Chart (08-11-2020)

Steve Strazza
August 11, 2020

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.

Similar to a lot of assets these days, price is breaking out of a long-term base to fresh all-time highs.

Click on chart to enlarge view.

Momentum recently shifted back into a bullish regime and is confirming the new highs in price.

Buyers have been trying to power through this level for a while and have failed time and again. This is not a negative characteristic though. In fact, the more times a level is tested, the more likely it is to break.

When price begins to test a level more frequently, as it did in the chart above, it is evidence of increasing demand and aggressiveness from buyers. This kind of action is constructive and typically portends that a breakout or resolution is likely in the near future.

Now that all the overhead supply at these former highs appears to have been absorbed, will this level act as support? Will it even need to?

Do we want to buy these new all-time highs and bet on higher prices?

Do we want to be cautious of a potential failed breakout, and fade this move?

Or, do we want to wait and see how prices react at this level?

Let us know what you think!

Tweet me @Sstrazza or email strazza@allstarcharts.com and check back at the end of the week to find out why this chart is relevant.

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Allstarcharts Team

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