Intraday Momentum Divergence Forms

Jan 8, 2008: 10:37 AM CST

As of Noon Eastern, a positive momentum divergence has been forming on the DIA (Dow Jones ETF) chart on the 15-minute time frame which could coincide with the potential for higher prices in the very near future.

This bit of information is also in conjunction with monthly support levels and daily/weekly support levels. It appears that the odds favor a bounce – however temporary – in the major US Indexes.

Notice that as intraday price makes new price lows, the momentum oscillator (bottom panel) fails to confirm these new lows. In fact, a pronounced divergence is developing which corresponds with price breaking above key moving averages on the 15-minute chart.

While there are no guarantees, it appears that odds favor a slight bounce with stops (if you enter a long trade) being placed beneath $127.00.

Let’s see what happens!

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