Broadening wedges are not patterns on which I place a great deal of reliance, but you can depend on them to generate false signals — in both directions. Dow Jones Industrial Average broke resistance at 17300 and has now penetrated the upper border of the broadening wedge. Follow-through above 17600 would confirm a primary advance with a target of 19000*. Rising 13-week Twiggs Money Flow indicates long-term buying pressure. Reversal below 17000 is unlikely, but would warn of another test of primary support and the rising trendline at 16000.
* Target calculation: 17500 + ( 17500 – 16000 ) = 19000
The Nasdaq 100 offers a target of 4500*, having broken resistance at 4100. 13-Week Twiggs Money Flow drifting sideways reflects a lack of enthusiasm, but recovery above 35% would flag renewed buying pressure. Reversal below 4000 is unlikely.
* Target calculation: 4100 + ( 4100 – 3700 ) = 4500