Caution: Rounded Top with Low Volatility
Yesterday I commented that, “I hardly see this as a decisively bullish move. It is more the “inkling” of a bullish move. And that’s a problem.” Today, we see a rounded top in the 39 Minute chart, which is definitely bearish. And low volatility leads to large moves. So we must exercise extreme caution here. The market has hesitated enough that I see a good case for a downside break and rally failure. Same posture going into Wednesday’s market.
The Daily Chart continues to show the wide range we have been in for months now. Will we break through the high and continue to the top of the channel? With the pattern that formed in the 39 Minute chart, it looks as if this market has run out of gas. An upside break through the top of the formation will be bullish of course. But I don’t think that is likely at this point.
With such lackluster movement, we must now watch for a downside failure through the lower line at 26,300. If that occurs, the market is likely to lose ground from here. On the other hand, a reversal through the rounded top at 22,700 would be quite bullish. One thing is certain… Wednesday will not be boring.