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CANDLESTICK CHARTING


A Harami For MDY

11/29/07 11:44:01 AM
by Arthur Hill

The S&P 400 Midcap ETF formed a harami at long-term support, and traders should watch for confirmation of this bullish candlestick reversal pattern.

Security:   MDY
Position:   N/A

The weekly chart shows the Standard & Poor's 400 Midcap ETF (MDY) with long-term support around 150 (Figure 1). The exchange traded fund (ETF) broke resistance around 150 earlier this year and broken resistance then turned into support. After bouncing off this support level in the summer, MDY returned in November, and an important test is at hand.

FIGURE 1: MDY, WEEKLY. Here's the S&P 400 Midcap ETF at long-term support around 150.
Graphic provided by: TeleChart 2007.
 
On the daily chart, the ETF formed a harami over the last two days (Figure 2). The smaller candlestick is within the range of the larger candlestick from the previous day. Tuesday's price action is completely within Monday's range and this also amounts to an inside day. The harami is potentially bullish, but requires confirmation with further strength. A break above Monday's high would be short-term bullish and call for a bounce.

FIGURE 2: MDY, DAILY. The exchange traded fund formed a harami over the last two days.
Graphic provided by: TeleChart 2007.
 
The upside target is to around 158–159. MDY broke support in this area and this support zone turns into a resistance zone (red box). In addition, the falling 200-day moving average marks resistance around 158 and the falling 50-day moving average is around 157.5.



Arthur Hill

Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.

Title: Editor
Company: TDTrader.com
Address: Willem Geetsstraat 17
Mechelen, B2800
Phone # for sales: 3215345465
Website: www.tdtrader.com
E-mail address: arthurh@tdtrader.com

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