The highlight of today’s chart is the bullish divergence between the composite index (middle pane) and RSI (upper pane). This is particularly interesting at this juncture since I can count five waves down and we are in the SLOT (the 50-78.6% retracement area which I have drawn as a box on today’s chart). This is the area where we should assume that support will hold as price pulls back from a new high.
If this divergence proves false we’ll have to see how price does at the TD Trend Factor target (purple line at 1614.62) as well as the Beta-X trendline (in orange). A close beneath this trendline will significantly raise the chances that the trending impulse pattern from last November is complete.
Bottom line: Chart remains bearish. Even if a rally develops here I would expect it to fail to make new highs and then go on to make even lower lows.
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