DXD Ultra Short Dow Industrials Weekly Chart Falling Wedge Positive Divergence

DXD is the double inverse ETF for the Dirty 30. The fun began in February this year with the falling wedge, oversold conditions and positive divergence shown in blue. This led to the launch into March (the major indexes were selling off). Note the blue circles that show RSI and money flow were not positively diverged and wanted to see a lower low in price, which price received with the bottom of the red wedge. At that point in time, the red lines show positive divergence across the board which catapulted price back skyward. This is a significant low for DXD and corresponds to the high for the Dow this year. The August waterfall market crash occurred sending price over the 50 week MA. The long and strong green lines show that higher highs were desired for price, which occurred into September, corresponding to the market lows.

Now price has fallen back down, as the October rally occurred for the broad markets, and price has created a falling wedge again, the neon green wedge. The thin black lines for stochastics and money flow want to see a matching or lower low, which we are honoring right now with the current price action.

Note how the neon green lines show that all the indicators should line up with positive divergence as this current low is placed over the next few days. This low will correspond to a final pop in the broad markets. Projection is for DXD to bounce back up due to the falling wedge and positive divergence coming once a low is placed in the 15.7-16.3 range. Also note the potential pink inverted H&S pattern now forming, head would be placed now, say 16-ish, neck line is 22-ish, thus the target would be 28-ish, which is also a confluence of strong resistance making it an attractive target in 2012.  Lots of weeks have to play out first and the pattern would need to see price move up, then back down to create a right shoulder, then up. The 20 week MA crossing above the 50 week MA will usher in long term upside for DXD, which correspondingly means, long term broad market weakness. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.