I always aim to K.I.S.S. by zooming out on the chart and looking for big picture key takeaways.
It's important to note the more we zoom out on a chart's timeframe (e.g. switching from a 1 day to a 1 month), the more significant the findings.
The chart shown is a 1 month chart:
(1) Negative Divergences on both the RSI and MACD since Jan-18 (2) Rising wedge since Mar-20 recovery (shown better on a weekly below)
I'm not saying the stock market is crashing tomorrow. What I am saying is there are long-term big picture warning signs telling us there is weakness in the price appreciation of the DJI that we need to be mindful of moving forward. Yes, at some point I expect these warning signs to resolve in a significant correction. However, that could take several years to play out. So we need to keep an eye on these charts.
Kommentera
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There are 2 main things to pay attention to on this 3 month chart:
(1) recent negative divergence on the RSI
(2) RSI peak in 1998, lower highs ever since while DJI continues to churn higher
Kommentera
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Weekly view more clearly depicts the potential rising wedge pattern I have been monitoring