Tuesday, May 21, 2013

UTIL Utilities Daily Chart Potential Two-Leg Bear Flag

We watched the rising red wedge form and negative divergence which created the smack down at the end of April. Price has collapsed and note how it hugs the 50-day MA for the last few days unable to make a decision of up or down. The MACD line and money flow would prefer to see another price low. For the potential two-leg bear flag, shown in blue, the first leg down is from 538 to 510, 28 points. The sideways with slight upward buoyancy consolidation phase occurs right now along the 50-day MA. So far it is a textbook bear flag. If price starts the second leg lower from 517-ish, the target is 489. As often occurs in technical analysis, the target areas match key S/R levels. In this case the 489-490 is a key support level.

The brown H&S pattern is also in play with price bouncing off the 510 neckline. The H&S, with head at 538, would target 482 if the 510 level gives way to the downside. The RSI is under 50% maintaining the bearishness. The utilities are important because it is typically an indication of extended market downside ahead if utes lead to the downside. Projection is a potential up move to back kiss the falling 20-day MA at 523 with further weakness ahead from this 515-525 area. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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