The Triangle with No Edge
Today’s session started with the overnight 1HR 20EMA rejections that accelerated into a 1HR 8EMA bear train. At 7AM, the market broke below yesterday’s low of 2064.50 which had targets of 2057 and 2047 supports. When the day session opened, the 15min bar closed as a large bull hammer but was subsequently rejected at 15m 20EMA bear train resistance. This meant that a lot of intraday bulls were trapped and a new low/retest was likely coming. The bears then made a new marginal LOD at 2050.25, but the 5min candle closed as a huge bull engulf.
This created a micro double bottom setup and the bulls confirmed it immediately with the 15minute bull candle engulfing the previous 5 candles. The immediate targets were back to the 1HR 20EMA at 2068, 2075 and 2080 resistances. By 11AM, the bulls made a high of 2073.25 before quickly rolling over with the 30min candle closing as a gravestone doji. This meant that there was a high possibility that the intraday range high and low were determined by these back to back large 30minute candles. At around 12PM, we decided to take the rest of the day off as there were no more high probability trades. For the rest of the day, it was just a rangebound shakefest between 2057 and 2070 that provided scalpers with decent risk vs. reward setups.
What’s next?
Daily closed at 2060, back below the daily 20EMA and now the
8EMA is trying to cross below 20EMA. The triangle continues with the daily
50SMA as support and 2085 as resistance.
There is no edge here, but only a slight bull bias because of the context from the weekly and monthly charts.
The swing bull scenario is that this is a triangle/higher lows formation with daily 50SMA as the major rising bull support. Needs to close above 2096 for the aggressive long entry, then it would need an immediate follow through to 2105 and sustain above it for the breakout.
The swing bear scenario is that this is a double top/lower high formation. Needs to close below daily 200SMA 2058 for the aggressive short entry, then it would need immediate follow through to 2040 and sustain below it for the breakdown.
If the bulls bottom here and test the 2095 resistance then the daily chart becomes an ascending triangle formation that heavily favours a bullish breakout.
We are going to continue using the same
plan from the weekend update, wake up and review the overnight pattern then
trade on a high probability morning setup. By employing a rangebound style
along the swing high/lows and take quick profits. This
should protect us from the false breakout traps like last Monday to Wednesday
when we traded using a breakout style. In reality the market was just
fluctuating inside the blue channel, but we failed to realize that early last
week.
