- Yesterday's candlestick (Apr 23) was a big bull car closing in its upper half with a prominent tail below.
- In our previous report, we said traders would see if the bulls can create a strong follow-through bull bar (it could start a 2-legged sideways to up pullback phase) or if the market would lack follow-through buying instead.
- The market formed a strong follow-through bull bar testing the 4050-80 area.
- The bears see the current move as a pullback following the climactic selloff and oversold conditions.
- They want the 4050-80 area or the 20-day EMA to act as resistance.
- They want at least a retest of the recent leg low (Apr 22) followed by a strong breakout and a measured move based on the height of the 5-month trading range.
- At the least, they want a small sideways to down leg to retest the April 22 low, even if it only forms a higher low.
- The bulls want a reversal from a wedge pattern (Mar 25, Apr 9, and Apr 22) and a lower low major trend reversal.
- They see the recent selloff as a sell vacuum and a bear leg within the trading range.
- They hope to get a 2-legged pullback testing near the 20-day EMA.
- They must continue to create consecutive bull bars closing near their highs to increase the odds of a reversal.
- If the market trades lower, they want it to form a higher low (vs Apr 22) and a double bottom (Apr 22).
- So far, the selloff from April 2 to April 22 was in a tight bear channel which means strong bears.
- The move is strong enough for traders to expect at least a small sideways to down to retest the April 22 low (AFTER the current pullback), even if it forms a higher low. Will it happen within the next few days?
- If the market forms a retest of the April 22 low, traders will see the strength of the selling. If it is strong, traders may expect a retest followed by a breakout attempt below the April 22 low. If it is weak, we may see more profit-taking from the bears moving forward, followed by more sideways to up trading afterwards.
- For tomorrow, traders will see if the bulls can create another follow-through bull bar testing near the 20-day EMA.
- Or will the market trade slightly higher but stall around the 4050-4080 area or the 20-day EMA and reverse lower, forming a retest of the April 22 low instead?
- The market remains in a large trading range (4500 - 3850). Traders may Buy Low and Sell High within the trading range.
- That means buying in the lower third of the trading range, and selling in the upper third until there is a strong breakout from either direction with follow-through buying/selling.
Andrew
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.