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Naz 6-27-03. Continued from last post.
http://tinyurl.com/17a
Wed a close on the low, a gravestone doji, still sitting right at the
bottom of the trading range, as vol continues to contract. Thurs an
up day on a nice wide spread closing on the high which brings us back
to the 50% line and above the flat 20d ema. Vol is sustained but well-
below avg. Fri no follow-thru, upthrusting the 50% line and closing
on the low, vol remains very light.
So looking at this present rally (so far) off the bottom of the
trading range compared to the previous rally (at AR), this one is on
lower vol and already appears to be much more of a struggle to make
gains just to reach the 50% line. The channel demand line has held so
we remain technically in an uptrend, however it's looking more and
more like it may indeed be a Buying Climax Trading Range.
Some more w/emas: I've added the 10d ema (green line) to this chart.
Note how it has acted as nice rising support since the March low.
When price dropped below it, it has then bounced back rather quickly.
There are also nice instances of convergence of the 10d, 20d, & 50d
ema's during this trend, as price consolidated, each preceding a nice
sharp sustained rally as volatility cycles between contraction and
expansion.
On 3/31 price gaps down sharply below all 3 ema's, then almost
immediately gaps back up above them all. The week of 4/07 a
consolidation at all three flat and converging ema's, price
absolutely riding the 50d ema at the low. (Note how the ema's stay
positively arranged here.) Such a convergence represents a short and
intermediate term contraction of volatility and one might have
expected some kind of sharp move here.
Which of course we got; a nice long rally (that also looks like a
typical 3rd Wave) that rides the rising 10d ema beautifully. The
pullback starting 5/16 follows the breakout from major resistance at
1520. On this reaction the 10d and 20d converge, followed by very
sharp rally to the BC on mega-volume. (This leg of the rally is also
typical of a 5th wave, shorter and very sharp.) You can see how price
pulls well away from the 10d ema during this rally as opposed to the
previous leg, when it clung to the ema and rode it up.
The AR pulls back to the rising 10d ema, not even flirting w/the 20d,
then rides it once again to the ST upthrust.
As of now the 10d and 20d are again flattening and converging as we
continue to consolidate. This is looking like a typical trading
range: High volatilty at the end of a rally, which composes the
BC/AR/ST, and then quieting down as volume and price movement and bar
spread contract as the range develops and price builds a cause for
its next big move.
So we remain in the uptrend channel and w/in the trading range but
continue to have more and more weakness in the background and fewer
signs of strength. As always, IMO!
Harold
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