Is The Transportation Index Setting Up A Topping Pattern?

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This Transportation Index Weekly chart provides a bigger picture look at the Bull Trap setup. The one aspect of the Weekly Transportation chart that we feel is critical is the 10,815 Bearish Price Trigger level from our Fibonacci Price Modeling System. This level is key to understanding if and when the Transportation Index breaks a major weekly Fibonacci trigger level. If price falls below the 10,815 level and manages to close below this level on an end-of-week basis, then we have confirmation that the longer term Fibonacci trigger level has confirmed a new bearish price trend. Right now, we don’t have that confirmation.

One other interesting pattern that has set up on the Weekly Transportation Index is the Three Rivers Evening Star topping pattern. This is a classic Japanese Candlestick top/sell reversal pattern. The term “three rivers” references the confluence of two rivers joining together (think of the strength and force of the water flow) to form a new “third river”. The descriptive name of the pattern is designed to illustrate the nuanced strength that lies behind this price setup. A three rivers pattern, once confirmed, is one of the more ominous topping patterns in the Japanese Candlestick price theory. It is usually associated with Doji and Hammer/Umbrella shaped price bars that are equally indicative of a price reversal.

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In our past research, we authored a research article about Dow Theory and price trends that we believe should be reviewed by our friends and followers. It clearly describes the “Down Price Trend” theory and our research team’s believe that recent weakness in the US stock market may prompt a new downside price trend.

At this time, we continue to urge our friends and followers to stay cautious of volatility and price rotation. The markets are in the process of rotating – certainly. The issue for all skilled technical traders right now is “will it find support or will it break down and start a new downside price trend?”.Our researchers believe we know what will happen next, we are just waiting for technical confirmation from price activity.

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