European Basic Materials
Bottom line
This sector has created a (potentially) bullish chart pattern.
Prices have been falling since 2011 in both absolute and relative terms and have now the possibility to start moving higher on both terms (absolute and relative).
Another brief correction (ie not a new low) is possible before the index starts its uptrend but a weekly close above the white line in Chart1 would increase significantly the probability of a more sustained move higher.
A break of the lower boundary on the contrary would be very bearish and probably accelerate the speed of the correction.
Analysis
Chart1 shows a potential falling wedge formation, confirmed by the MACD oscillator.
The MACD is showing strong bullish divergence and has also broken its resistance line on the upside, a move that more often than not is a good warning that the same is going to happen to price
Chart 2 shows the relative performance vs the DJ 600: we have another bullish divergence and a retest of the 2009 low. Basically the sector is as hated today as it was in the midst of the 07-09 bear market.
Chart1 - DJ600 Basic Resources
Chart2 - DJ600 Basic Resources RELATIVE CHART (ie relative to broad DJ600)
http://pentothalta.blogspot.com/
Bottom line
This sector has created a (potentially) bullish chart pattern.
Prices have been falling since 2011 in both absolute and relative terms and have now the possibility to start moving higher on both terms (absolute and relative).
Another brief correction (ie not a new low) is possible before the index starts its uptrend but a weekly close above the white line in Chart1 would increase significantly the probability of a more sustained move higher.
A break of the lower boundary on the contrary would be very bearish and probably accelerate the speed of the correction.
Analysis
Chart1 shows a potential falling wedge formation, confirmed by the MACD oscillator.
The MACD is showing strong bullish divergence and has also broken its resistance line on the upside, a move that more often than not is a good warning that the same is going to happen to price
Chart 2 shows the relative performance vs the DJ 600: we have another bullish divergence and a retest of the 2009 low. Basically the sector is as hated today as it was in the midst of the 07-09 bear market.
Chart1 - DJ600 Basic Resources
Chart2 - DJ600 Basic Resources RELATIVE CHART (ie relative to broad DJ600)
http://pentothalta.blogspot.com/