Wide diversification is only required when investors do not understand what they are doing. ~ Warren Buffett
Chart 1 Four Hour Dow Jones
A very dull week for the stock markets and we are currently grinding higher but the Nasdaq finished red yesterday and lagging again today. We could push above 11500 however it seems like it will be short lived. The four hour chart clearly shows the action of the past few months. We have been literally range bound, above 11000 with the pivot point sitting around 11260. We are currently seeing this breakout fake out occur which will likely reverse soon. The area to watch here is the rising upward blue channel. It could well be the price could reach a problem area should we meet the upper side of this rising channel and a decline from that moment would likely start a pullback.
The pivot point still sits at 11260 and needs to give way before downside can be talked about.
Chart 2 Four Hour Euro
After Monday's sharp move higher we are now hearing talks of 138. We must restrict the excitement as price only needs to move 200 points lower and everything will look sour again. 135 is the mark that many feel must disappear. However we have hit this very mark earlier in Tuesday's session and price could just peek above the level fractionally but downward pressures still remain.
The red flat lines shown on the chart can simply seem like range bound sideways action so far. The slight rising blue channel is hardly a real rally and price must take out the upper side of this blue rising channel before we can feel this elevation. Curling down from here would trigger a tank in the currency's value so we must act with caution.
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