Thursday 2 August 2007

A Buy Signal?


For what its worth, we had a low yesterday within one of the target boxes posted recently. Of equal interest is that we now have a bullish divergence between price and the RSI indicator at that low. In my work that means we have a buy signal in place on the daily chart right where we've counted a full five waves down.


The attached chart (see arrows) shows how even though price made a new low (closing value) the RSI indicator did not.


I would view any rally from here as a "bear market rally". Also known as a counter-trend rally; which tend to be swift and at times quite dramatic.

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