Sunday, July 17, 2011

Speculative Diamond Bottom and/or Cup and Handle

This past June I speculated that the market potentially was forming a diamond bottom. Whether or not the pattern was legit, a bottom had formed and a breakout occurred.

Recently I speculated that perhaps the same type of bottoming process was occurring and once again I'll call it a diamond bottom.

Should my most recent call for the pattern not play out, the above chart may be calling for a larger pattern to form over the next couple weeks.

I believe we will see a bounce this coming week. How high will help determine if the 7/13 pattern is correct (use the blue trendlines in the chart below) or if this new larger pattern may be playing.

I have also proposed this cup and handle pattern as well. The handle looks like it is complete, which also correlates well with my most recent 5 min corrective count.

I would assume if just using patterns here, there are a few (whether correctly identified and named or not) that point to this being a continuation pattern. We shall see here shortly.

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