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Sellers planning a new assault on the US30?

July 25, 2022
by Joseph Jeffriess, Market Analyst

Sellers planning a new assault on the US30?

Welcome to Monday’s update. Today’s focus is on the US30, as two things have caught our eye on the 6H chart.

After Friday’s decline, we can see that the price now sits at the bottom of its ascending wedge pattern. This doesn’t tell us right away that a new decline will break the pattern and make a new move lower. We could also see a bounce off the bottom that could end up retesting the channel’s top.

What makes this channel a little more intriguing is the fact that the OBV has formed divergence. Divergence is when the price makes a new high, but an indicator makes a lower high. This can tell the trader that the current high could be weaker than first thought, and the price could actually reverse.

In this case, it’s quite clear that the price made a new HH at 32,193, but the OBV peaked at 23,295, well below its last high. This is not a guarantee. We have already seen some selling, so for me, I would like to see a break of the channel to start telling me that sellers are in control. If the price fails to break out or if it gets back up to test the last high, I’d be somewhat sceptical of the previous divergence pattern.

Let’s see if sellers can take that next step to confirm the divergence pattern.

US30 6H chart

All times are AEST.