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DJIA 9_26_2011



PRICE ACTION
  • An inverse Head & Shoulders formation or Nose & Hands is forming. A close above 10,900 would confirm the formation. The minimium profit objective is 11,000.
  • A flat formation was completed at the start of trading last night. An X-wave formed overnight. I expect to see the second corrective wave of a double or triple three form today. The second corrective wave could take the form of a zigzag.  
  • The mid-point of the pivot point and support one held as did resistance one.
  • Price is below the 200-hour simple moving average. 
VOLUME
  • Volume has confirmed what has formed of the inverse H&S pattern. The volume on the head is lower than the volume on the left shoulder.
  • Volume should be higher on the right shoulder than on the head to confirm a move higher. 
RSI
  • The RSI formed a divergence with price. A divergence is a non-confirmation of the low that formed on the 23rd.
  • The RSI is trending up which signals that the downtrend has lost momentum. 
  • The overnight low in the market held bullish support on the RSI. The RSI holding support signals that the market has suffcient strength to make a new high.