DUG Update

Recently I talked about DUG and the market's tactics of false breaks/head fakes, both bullish and bearish.

Last week DUG had a 1-day break below support that  viewed as a false breakout (DUG was mentioned as a long play).

Here's the updated charts for DUG.

 DUG's overall daily 3C chart is very bullish with a quite large base, although it's not uncommon for a shakeout before a base breaks out.

 Here are two false breaks/head fakes, one to the upside sending DUG down quickly and Thursday of last week's break to the downside. These false breaks serve as a sort of booster for the trade. For instance on Thursday, shorts would have jumped in the trade on a break of support, when DUG move higher, the shorts are squeezed creating more buying/demand for the move up, this is why these head fakes can snowball so quickly.

 Here you can see 3C identifying both as false breaks, the upside break with a negative divergence suggesting the move was a head fake and the downside break with a positive divergence suggesting another shakeout.

The 22 bar m.a. on a 30 min chart has served well as a stop for the swing trends and you might consider using it as a long trade stop. Ultimately DUG will see the biggest move once it breaks out of the base around $31.75. The price pattern implied target for DUG is around $70.00