Interesting patterns

I like to look for patterns (click on the chart to enlarge i).

Above average volume is an important gauge. It usually appears at bottoms. It signals capitulation, which is bullish.

Strong volume, however, can happen during a strong rally. It shows there are too many buyers, and they cannot be all right. This is clearly a sign of distribution, which is bearish.

This last pattern is particularly telling if it takes place near a resistance levels.

An important rally is under way if the resistance level is broken on the upside with above average volume.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

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