Envelope Surges Show Strength

The chart below shows DIA with a 20-day SMA and an envelope set 4% above/below the 20-day SMA. Notice how the January plunge below the lower envelope triggered an extended decline. Conversely, the March surge above the upper envelope kicked off the current rally. Not all signals are this clean though. There will be whipsaws.

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Click on this chart to see more details.

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