A Rare Three Day Rally in the Russell 2000 Index – and an Ominous Doji
Monday’s close on the Russell 2000 marked a third consecutive higher close for the index. This hasn’t happened since it began forming a horizontal channel consolidation pattern in December last year.
The bad news is that a gravestone doji formed in the session, a candle with a narrow opening and closing range situated at the lower end of its overall range. A gravestone is often seen at failed new highs. Previous channel highs have been marked by similar bearish formations, like the early channel eveningstar pattern and a series of dark cloud cover candles, all of which prevented more than a two day advance.