With today’s broad market bounce, I am keying off the IWM, ETF for the Russell 2000 Index. We know the daily chart is still dealing with a confirmed head and shoulders top from two weeks ago.
On this 30-minute timeframe, below, in order to gauge whether this bounce has more upside I am observing the declining 20-period moving average (orange line). A bounce up to it is a normal reflex rally within a downtrend. But after that mechanical move we should start to gain more valuable information about just how much staying power this bounce has.
I would expect bears to at least make a move in and make a push at rolling the tape over. Let’s see how lucky they are feeling.
On the second chart, below, also a 30-minute timeframe, this one of TLT, I will look to lock in the rest of my long TMF win if Treasuries fall into the gap below the light blue line I have outlined.
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