Yesterday's candlestick was a bull reversal closing near its high with a long tail below.
In our previous report, we said traders would to see if the bears can create a strong retest of the 3850-3800 area and close (yesterday) as a strong bear bar near its low, or if the candlestick would close with a long tail below and above the middle of its range instead.
The market tested near the 3850 area but reversed to close as a strong bull bar.
The bears couldn't get a strong bear bar after testing the 3850-00 support area.
They got a strong second leg sideways to down (Apr 14 to Apr 22) to retest the January low.
They hope to get a breakout below the January low followed by a measured move based on the height of the 5-month trading range.
For that, they must create a strong breakout below 3850-00 with strong follow-through selling.
If the market trades higher, they want the 4000 or 4050-80 area or the 20-day EMA to act as resistance followed by at least a small retest of the recent leg low (Apr 22, 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 current move as a sell vacuum and a bear leg within the trading range.
They hope that the 3850 trading range low area will act as support.
If the market trades lower, they want a failed breakout below the 3850 area.
Since yesterday's candlestick was a bull reversal bar closing near its high, the bulls need to create strong follow-through buying tomorrow to increase the odds of a retest of the 4000-4080 area or the 20-day EMA.
If the bulls can create a strong follow-through bull bar, it could start a 2-legged sideways to up pullback phase.
Or will the market lack follow-through buying instead? If this is the case, that would indicate that the bulls are not yet strong.
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.
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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.