Daily 8EMA Bear Train vs. Temporary Bottom
Today’s session
started off with last night’s overnight breakdown below last week’s low of
1849.25. This provided the bears with the bearish breakdown continuation
targets of 1834 and 1805.
When the day session opened, the bears got a chance
to board the train using the 1HR 20EMA resistance. Shortly after, the hourly
candle closed as a top wick rejection bar that engulfed the previous bar.
Basically, the 1HR 20EMA bear train accelerated into 8EMA and as noted in the
pre-market post about the major support levels. If 1831 breaks during the day
session, the flush setup was in place and the major levels were 1813 and 1800
after. If 1800 broke, then the flood gates would open up 1775 and 1750.
When the bears
fulfilled the 1805 measure move target from last night, it paved the way for
bulls to have a deadcat bounce to 1820. As noted in our intraday comment, the
bulls had a defined risk vs. reward trade using the major support level of 1800.
However, we soon learned that this deadcat bounce was more than expected as the
30min and hourly closed as bull candles. At this point, we noted that if bears
are unable to maintain the train below 1839 then a reversal bull train would be
in the works. It was also apparent that if we had a 5min or 15m close above
1842 then the measure move for the reversal bull train targets 1865-1870 with
the 1HR 20EMA feedback loop squeeze.
What’s next?
Daily closed at 1852 as a massive bottom
wick candle, this means that the bulls most likely found their temporary bottom
and setting up for a short term relief rally in the daily chart context.
We are currently projecting a potential pullback
back to the 1841 and 1833 support levels (50% fib retracement 61.8% fib
retracement) then bounce. However, the most ideal case for the bulls is to hold
the 1850-1855 area if they want to setup an accelerated reversal pattern
instead.
Technically, this is still an 8EMA accelerated
bear train, but the momentum of price is shifting with how it closed today from
the sticksave off 1804.25. If bulls are able to hold support tomorrow then we
could be in for a short-term relief rally back to at least 1892, 1900 and 1905
in the next few sessions.
Current Plan for tomorrow:
Keep position sizes small as we could potentially
shake inside the 1878.5 vs. 1804.25 for the entire session as most of the “easy
money” has been made already.
