Overbought and Undigested
The market made an impressive recovery last week and moved out to a new reaction high in the daily price action. The recent strength has created a breakout from the correctional downtrend channel started in April, which suggests the correction is ending and that puts the bulls back into an offensive position.
The only problem with this scenario is that the market is overbought in the short-term and we need to see the gains "digested" by the market. If the market is able to work off the overbought condition and hold onto the bullish turn, it would be a significant change in the character of this market environment and open the door for the bulls to take the market to new highs. In the short-term traders should expect to see some stalling and weakness in the price action....263 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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