Sunday, May 17, 2009

The IWM Wedge

The measured rule for a rising wedge is to target the bottom of the pattern. However, I think we should start conservative and see how things go. I would look for support at the rising 50 dma first (currently $44.69), then if that breaks watch $42.72 which represents the Jan low and a 50% retrace of this move. If that level breaks I think that a test of the lows will be all but guaranteed. Look for volume to increase as IWM rolls over as a confirmation of the pattern. Good luck.

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