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Positive Momentum remains at hand in the broad market. Investors have to keep in mind that if momentum can "Pull itself up" and beyond this resistance at (1), it could quickly move much higher...Follow a breakout should it take place.
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Last week the "Power of the Pattern" reflected that Dollar bulls were jumping ship (See post here) The Dollar has been moving higher of late, after breaking its steep falling resistance line. Tests of a support line often take place and it looks like the Dollar is testing the top of the cup & handle pattern today at (1).
The Dollar has created this morning a large bearish wick. What the Dollar does in the next 48 hours will be huge for the broad market/risk assets, especially if support line (2) holds!
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Shared this chart with Premium Members 13 days ago reflecting that Silver on a "Monthly" basis was facing dual resistance lines at (1).
For aggressive investors that are looking to score on defense, the dual resistance presents a good price point to build short positions in Silver, with a stop just above resistance.
On 1/23, the S&P Railroad index below, was at resistance- creating a bearish rising wedge. A breakdown of a similar pattern last summer led to a sharp broad market decline of 20% in a matter of weeks. The question 3 weeks ago was...Could the Railroad Index Derail the broad markets rally, by declining out of this pattern? (See post here)
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Below is an update to the S&P Railroad index, reflecting a swift decline is taking place as it breaks down from the bearish rising wedge. The pattern of late looks a good deal like the price action of last summer!
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This index was a good leading indicator last summer, reflecting that weakness was ahead for the equity markets. Keep a close eye on the index again as it down almost 10% off its highs and is breaking a key support line.
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The Shanghai & Wilshire 5000 index's have peaked together a couple of times in the past 5 years. Currently, both of them are facing falling resistance lines at the same time at (1) in the chart above.
Positive Momentum is with the markets at this time.
No doubt a breakout at (1) would be very postive for both of these markets. For momentum to remain in the drivers seat, these resistance lines need to be taken out!
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