Chip and Dip Wednesday, page-3

While the XJO has broken that 11 month downtrend, I make a couple of observations in the daily & hourly charts:

1. Last Monday and last Friday form a small double top evident on the daily
2. The index has formed a a short term range (5083-5216)
3. On the hourly there is evidence that that current bullish wave is weakening with the MACD of the 20 & 50 MA's showing decreasing highs over the last few weeks

As someone commented on the weekend markets can stay overbought or oversold for a long time so the weakening signal those MA's provide doesn't mean it won't go up (a sequence of peaks like that will sometimes lead into a new higher peak). The double top suggests a reversal at least in the short term, while the range suggests the market is at least thinking about which way it wants to go...

Fundamentally I interpret the chart action as a weakening of momentum in the current bullish wave - i.e. the market has moved up on the shift in recent global economic news (increasing commodity prices, ECB stimulus, China, Fed, Aus economic news, etc) and has absorbed that news, but will now need new stimulus to either keep it going on up, or cause it to pull back.





Cheers, Sharks