Don't Ignore This Chart!

Detecting a Fade in Downside Momentum

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Positive divergences in MACD show waning downside momentum that can lead to a breakout. DR Horton (DHI) forged a lower low in early July, but MACD held above its June low for a positive divergence. Despite a lower low in the stock, downside momentum was fading. MACD's subsequent move above its signal line preceded a resistance breakout in DHI. Note: This is an educational post featuring a technical analysis technique.

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Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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