On a non log basis, two of three indices and the dollar are
testing/kissing back the lower trend line of the classic their respective wedges
from March 9, 2009. Failure to reacquire the trend line elevates the
probability that all will indices will begin their journey to the wedges’
minimum measurement objectives; retrace to the wedge beginning FASTER than it
took to build.
http://www.screencast.com/users/Virginia_Jim/folders/Jing/media/d63548ec-aa7e-40b3-b712-15d70fd6aedb
All of the indices’ wedges fit perfectly the classic
definition according to Edwards and Magee. That definition requires as confirmation
that volume DECREASE NOTABLY over the duration of the wedge until it simply “peters
out.” When volume “peters out” price falls below the
lower trend line, retests and, upon failure, accelerates towards its
measurement objective.
In stark contrast, the much lauded “inverted head and
shoulders” that has March 9, 2009 as the head is an INVALID pattern
according to the classic definition. That inverted H&S projects 1229
as the measurement objective. However, according to Edwards and Magee,
volume must INCREASE NOTABLY to the right of the head. The exact opposite
has occurred.
If you looked at the above charts on a log basis, all
indices have violated the trend line and the breaks are far worse.
http://www.screencast.com/users/Virginia_Jim/folders/Jing/media/1a5dc9d0-6e65-49d0-a02d-49ce594906d6
According to classic TA, the safe entry to take a position
is after a trend break exceeds 3% of the value of the stock at the point of the
break. Typically after the test and, provided it is a genuine break,
price diverges from the lower trend line rapidly and with increasing volume.
It appears to me we’re peering over the cliff.
Jim