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RSI


CH Robinson Backs Off Resistance

01/04/08 09:52:33 AM
by Arthur Hill

After hitting range resistance, CH Robinson started losing momentum and the RSI triggered a bearish signal.

Security:   CHRW
Position:   Sell

Figure 1 shows CH Robinson Worldwide (CHRW) over the last 12 months with a clear trading range. The stock hit resistance around 55 at least six times since February 2007 and bounced off support at least three times since March 2007. Most recently, the stock surged to resistance at 55 in December and formed two reaction highs.

FIGURE 1: CHRW, MONTHLY. Here's the stock over the last 12 months with a clear trading range.
Graphic provided by: MetaStock.
 
Figure 2 focuses on the last few months. The stock surged to resistance with a three-week move in late November 2007 and early December. A long black candlestick marked the first failure at resistance on December 11. A second long black candlestick marked the next failure on January 2 (red ovals). These long black candlesticks show serious selling pressure and confirm resistance at 55. The December lows mark support at 51 and a break below this level would target a decline back to support at 45.

FIGURE 2: CHRW, WEEKLY. The stock surged to resistance with a three-week move in late November and early December.
Graphic provided by: MetaStock.
 
The top indicator window shows 14-day relative strengh index (RSI) with a negative divergence. The stock moved above its early December high, but the RSI formed a lower high and this produced the negative divergence. The indicator (momentum) did not keep up with price action. The RSI has since moved below 50 and below its December low. This is bearish for momentum.



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
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E-mail address: arthurh@tdtrader.com

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