Ascending
Triangle Ride
Today’s session was a bit frustrating if you had missed the ideal range high short like us in the morning. Before the day session opened, the market tested the 2095 ascending triangle range high resistance at around 8AM. Then, it quickly rolled over below the 15minute 20EMA by the 9:30AM open. The hourly day session bar closed as a massive bear that erased the previous 5 hours of gains. This confirmed our gut feeling for the day being a range day shakefest setup between 2095 and 2081. This was a high probability scenario due to the monthly candle closing along with price just trading inside the ascending triangle.
As the session unravelled, the 1HR 20EMA resistance got rejected three times during the day session and caused almost all our buy scalp trades fail. The bears made a slightly lower low to 2078.50 near the end of the day which was just slightly below the 1HR 200SMA and ascending triangle major support region. It is fitting that the market has bounced 10-15points in the after hours session back to the 2095 range high area. This is a perfect example of a textbook shakefest where it lured in both sides and trapped them through the range and nothing has changed after all that’s said and done.
What’s next?
Daily closed at 2085.25, this is still above the daily 8EMA and inside the ascending triangle combined with hovering at the 78.6% fibonacci retracement level. Consolidation at highs favours bulls since this is a bull train until price proves otherwise.
Monthly candle has closed with a small bull body and wicks on both ends; this is considered a win since it’s a straight continuation higher high from the massive October bull bar setup.
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Since nothing has changed, here is the copy and paste from the weekend update:
As long as price remains above 2070, the immediate targets are 2100 and 2110.
The intermediate target is the cup and handle 100% measure move that targets 2128.50. (There is also an ascending triangle that targets 2123.50)
For bears: breaking below 2070 would be first hint of bull train exhumation and warning. A follow through breakdown below the week’s low of 2065.50 would confirm a temporary trend change and targets 2059 and 2045 for the extension.
18 Months of Range Bound Market – Approaching the Range High
As briefly discussed in older updates, the market has been in a large monthly range bound market for the past 18 months with the range of 1803.25 to 2134. Based on this context, the daily/weekly bull train is approaching this massive range high resistance area of 2100-2134. This means that the swing bears are going to try and re-short here as long as price remains below 2134.
Weekly Chart Perspective
The past Thanksgiving week, the bulls have held above 50% of the Nov 16’s bull bar. Now, they need to trigger above the Nov 9 week’s high of 2097.75 for the mini squeeze to intermediate targets of 2123 and 2128.50. Remember, the previous weekend update scenarios were straight continuation up/consolidation week first then up next week. This means that this week bulls breakout and go.
Monthly Chart Perspective
In the context of the monthly chart, August 2015 vs October 2014 formed a double bottom – this is the intermediate swing breakout bulls are looking for new ATH. Remember, the October monthly bar was a huge bull engulf that still gives the potential of a breakout the next few subsequent months as long as price stays above October’s half way candle point.
