The reason chartology is at all useful is "market memory" and once you lose that you are much better off going to the neighborhood haruspex.
As I said in 2014's "Chartology: Monster “Mega-Phone” pattern breakout near?":
You have to be careful with this stuff.From ZeroHedge:
Humans are pattern-recognizing machines and are so good at it that we can see patterns that don't even exist.* In the instant case you really have to beware of imputing meaning to lines on charts; the reason technical analysis has any validity at all is because of "market memory" one example of which is resistance to upmoves caused by prior investors waiting to "get even and get out" and supplying stock to the market.
(one of the reasons to like new highs, no overhead supply)
In these long term chart there is no market memory, for example there are very few people with positions established at the Aug. 24, 1987 2722 DJIA high which is used as the basis of one of the trendlines shown here....
Earlier today we commented that while stock markets across the globe, heavily influenced by central bank intervention from the PBOC to the SNB, are doing everything in the central planners' power to telegraph just how irrelevant Greece is, other indicators are far less sanguine. One example was copper, which plunged to a level not seen since February, and was in danger of breaching its 15 year support level.
The commodity weakness today has persisted and is now crushing both WTI crude and Brent, both of which are in freefall, and WTI is now down over $3 on the session, or 6%, to a $53 handle, the biggest one day plunge since February (and the third largest in years) to a level last seen in early April when there was much hope that the dramatic plunge in December and January was finally over. Turns out it wasn't.
And, just like in the case of copper, should the drop in Brent persist it too, like coper, would be in danger of breaching a very long-term support line starting with a base in 1999 and continuing all the way through the the plunges of booth 2008 and early this year. SocGen with more:
As previously highlighted, last May price action in Brent formed a monthly Spinning top pattern at the key resistance of $70/72, the interception of the upward channel upper limit and 2010 levels. A Spinning Top is a bearish pattern, rarely a reversal one though, which usually happens after an extended rally/a new high which indicates a pause in upside momentum.
After peaking at $70/72 levels, Brent has been correcting lower within a down sloping channel ($64.37-$58.30) and the down move suddenly accelerated after the up sloping channel in force since last January finally gave way (i.e. $62.00/62.30 levels, blue dash)....MORE