Distance Improves Focus
The more crazy and uncertain short-term market
activity appears, the more I seek the peaceful sense of orderliness in
longer-term charts. Often what is random noise in the short-term, is part of a
larger, well-defined pattern.
Here is one case of this in Ebay
(
EBAY |
Quote |
Chart |
News |
PowerRating).
Normally, given the number of bars I’m displaying on this chart,
I’d compress it to a weekly time frame. But I kept it as daily bars because it’s
easier to see how eBay’s somewhat sloppy price action of the past three months
contrasts with the orderliness of movement through a 20-month uptrending
channel. On Thursday, eBay is bouncing higher off the intersection of its 20-day
moving average and 60 price level, which has been both a robust support and
resistance level since the fourth quarter of 1999. Normally this setup wouldn’t
interest me much because I’d want to some good volume to chime in and perhaps
another support factor. But this action looks more favorable when considered in
the context of eBay’s successful test of support and subsequent bounce off the
bottom of the long-term trend channel.
Sometimes you can bring a chart more into focus by backing away
from it.
See you tomorrow,