This Market is Giving Traders Indigestion
- Posted by Greg Harmon
- on December 11th, 2012
Fiscal Cliff, Debt Ceiling Limit, European problems, and all around the holidays. No wonder you have indigestion. Another sign that clearly shows traders have indigestion is that Astrazeneca, $AZN, the maker of the little purple pill, is hitting new highs. The weekly chart below gives a clean view of the price action over the last 3 years. What stands out from a technical perspective is the descending wedge that formed from December 2010 through to July 2012. The breakout above that to a test of the may 2011 high retraced back to the confluence of the 50 and 100 week Simple Moving Averages (SMA) and near a retest of the wedge breakout before launching back higher to
a new high. It still needs to hold over the previous high for the rest of the week to print a candle that triggers a buy, but it has support from the rising and bullish Relative Strength Index (RSI) and the Moving Average Convergence Divergence indicator (MACD) that is crossing to positive. A solid trigger gives a target of 52.70 on a Measured Move higher. That lines up quite well with the target from the wedge break at 52.82. Wouldn’t it be nice to ride that higher rather than continue to get indigestion?
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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