The Dow suffered declines over the past 3 days. I was originally thinking that it would rally on Friday. And I was initially quite disappointed that it closed below the downward trendline it had broken this week <12300.
However looking at the chart formation again, it looks like a rally might be coming over the next few days.
This move back from the recent rally is a throwback. After an upward breakout occurs, the price declines to or comes very close to the breakout price or the chart pattern trendline within 30 days. There must be white space between the hooking price action of the throwback and the breakout price.
Looking at the chart, the breakout upwards probably happened on 18 March 2008. Friday's Dow close was back to around those price levels. And there is certainly white space. (see the shaded oval)
The selloff for the past 3 days was also on low volume. Which doesn't seem to suggest strength in the down move.
Also notice MACD divergence with the downward price movement.
It all seems to be setting up for a good rally next few days!
On the downside watch 11950 and 11640 as support levels. If these give way then we're headed much lower.
But the chart is all setting up for a rally next week on Wall Street.
No comments:
Post a Comment