The Range Continues
Friday’s session was quite interesting, the overnight bears
held onto the 1HR 20EMA rejection bear train. When the day session opened the
bulls cleared the overnight high of 2062.75. The first hourly candle closed as the
largest bull bar that eclipsed the 17 hours. The next intraday targets/resistances
were the 2072-2074 level from Thursday’s report and then 2080 which is the bottom
of the blue channel resistance. When the bulls went above the 2072-2074 level
by 11AM, the retracement was considered too large because that’s the 50% fibonacci
level and back above the daily 20EMA. Shortly after, an hourly bull sandwich
setup was completed at 1PM which broke above the 2080 lower end of the blue
channel. The next resistance was 2090-2091 which the middle of the blue channel
range is and that’s where the day ended. Overall, it was just a standard 15m
8EMA+20EMA bull train and resulted in a full retracement of Thursday’s bear
continuation setup.
A quick recap of what occurred this past week:
- Monday consolidation day where the morning 8AM tested the purple ascending triangle resistance and dropped back to the purple ascending support
- Tuesday broke above the ascending triangle and in breakout phase
- Wednesday tested the upper blue channel range and rolled over during the overnight session which resulted in a false breakout bull trap
- Thursday was a bear trend/continuation day of the previous daily bear candle setup, hourly extreme oversold signal was confirmed at 4PM for an initial deadcat bounce(this was not just a typical signal that results in a quick 10-20 points bounce, this was a “A+ Tier”signal*)
What’s next?
Daily closed at 2088.5
and the weekly candle ended as a doji candle which was also a weekly 20EMA
sticksave. Daily also closed above the 78.6% fib retracement from November’s
high and low.
Currently, there are no immediate targets as prices could not
remain below the daily 20EMA since the bears failed to hold their ground and
the bulls had a full retracement Friday. Until the blue channel range resolves,
this is merely just a rangebound market/shakefest. However, the bias still
slightly favours the bull side as daily chart is above 8EMA and 20EMA along
with the weekly and monthly chart perspectives.
Our current plan for early next is to trade using a rangebound
style along the swing high/lows and take quick profits. This should protect us
from the false breakout traps like 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.
Weekly Chart
Perspective
The Nov 16th large bull week setup of holding
half and continuing higher bias is still valid as this week closed as another
doji candle off of the 20EMA sticksave. The previous two weeks had been doji
candles which mean that both the bulls and bears are indecisive still.
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.
*The Hourly Extreme
Oversold/Overbought Signals
The hourly extreme oversold signal that was confirmed on
Thursday Dec 3rd at 4PM was not a typical one. What we mean by that is that it
was more of an extreme status than our typical signals that result in quick 10-20
points bounce/drop depending if it’s oversold/overbought.
A typical hourly extreme oversold signal was the one that
was confirmed on Wednesday Dec 2nd at 3PM which resulted in a quick 10
point bounce in Leg 1 then almost 20 points by 5AM in Leg2.
Let’s distinguish this
by labelling the extreme of an extreme oversold/overbought signal as “A+ Tier”
vs. the typical extreme as “A tier”.
When we reviewed the charts more comprehensively over the
weekend, we noticed that the past 5 incidents where this hit “A+ Tier” oversold,
it resulted in a minimum average of 50points bounce/rally by the next day’s swing
high.
These extreme oversold/overbought signals are considered proprietary
and are derived from MACD+RSI+PRICE which are then confirmed by discretion. We
will be working on a system that gives automated confirmations in the future so
it frees up time. The executed trades winrate on these signals is still
hovering at 80% over the years that we’ve traded through multiple instruments
since we started tracking them.
