Compression Raises Stakes for Next Move

The weekly chart is also showing increasing compression of price as the range contracted last week, putting it inside the range of the prior week. Subsequently, this week’s range could extend that compression to a second inside week. Expansion follows compression, and a second consecutive inside week on the weekly timeframe could lead to a sharp move in price.

Given recent bullish indications, the more likely direction looks to be higher. That potential for expansion makes the current test of the 200-day moving average especially important, as a successful breakout would provide the clearest confirmation yet that the developing bullish structure can continue.