We Shall Return

Beyond the technical terms we often discuss when analyzing charts, a simple fact is that rangebound markets often return time and time again to precise levels to test them out and see if they are, in fact, legitimate.

In other words, the inherent indecision associated with market ranges manifests itself when price continually probes a given reference point or price level (or both) as a matter of price discovery. This stands in stark contrast to more decisive, trending markets which may bump against support or resistance once or twice, and then is usually done with it for a while as the next move commences. 

Currently, the Russell 2000 Index's ETF, IWM, sees the small caps finding resistance, once again, as it returns to its 50-day moving average (dark blue line on IWM daily chart, below). Note how price found supply or resistance here several other times just in the month of April so far. Beyond that, we know the small caps have essentially been rangebound since last November/December. 

Until bears can breach $134, below, with authority, and until bulls can remount that 50-day moving average, we may simply be dealing with a choppy market filling up time by focusing on things like French elections and changes in cable news.

But the true test will be how many more times bulls and bears can afford to return to their respective battleground islands before they lose through attrition.

More in my usual Midday Video for Members.