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August 10 Chart of the Day - Kellogg

From a price action technical analysis perspective Kellogg (K) is a chart that exhibits a change control zone as seen on the weekly chart in the gray shaded rectangle.

Change control zones are one of the five tools we teach when charting anything.  By definition, they are an area that represents where neither the bulls nor bears are in charge.  Price can slash though the zone with seemingly reckless abandon, price can respect the top or bottom from outside it or within it.  Or, price can trade aimlessly sideways within it.  When price breaks away from the zone it can often get drawn back to it like a magnet. And in this case we see all of the above are true.

So does that mean you can't trade it? The answer depends on your trading style.  These zones aren't so great for investors though.

But traders that understand how to identify change control zones on a chart can trade them level to level until one side wins out.

This zone is one of the longer change control zones we've seen in recent memory.  But a wedge is appearing on the weekly chart so it will be interesting to see how price moves in the future.

So what's next?

Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.

  1. Support/Resistance
  2. Trend
  3. Fibonacci 
  4. Supply/Demand Zones,
  5. Change Control Zones

Take a look at the charts and let us know what you think.  

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