Lumber Update October 2015 (D)
Created on Monday, 05 October 2015 01:28
Written by Austin Galt
Lumber has traded a bit lower since the last report and we continue to look for a rally within the overall strong downtrend. Let’s briefly update the daily chart.
LUMBER DAILY CHART
The PSAR indicator has a bullish bias with the dots underneath price.
The Bollinger Bands show price has left the lower band and seems to be finding some resistance at the middle band. I suspect it can overcome that and head to the upper band. Why?
The RSI shows a bullish divergence which I think can see price head higher in the near term. However, I suspect a triple bullish divergence will form before any significant rally occurs. That will require another price low.
Also, the Stochastic and MACD indicators are both bullish leading me to believe some short term upside is in store.
I have drawn a Fibonacci Fan which shows the recent low at support from the 38.2% angle while the 50% angle looks to be currently providing some resistance. I favour price busting higher with the next 61.8% angle providing even stiffer resistance.
The horizontal line denotes the previous swing high at $255 and price needs to crack that level to signify the bear rally is on.
Personally, I suspect one last low will occur in the near future before a substantial bear rally takes place that sees price rally to levels outlined in previous analysis.