The Intermediate Trend Battle
Friday’s session was fairly simple as the
overnight session consolidated in a tighter range and we noted in the
Thursday’s night report that price contraction is generally followed by price
expansion which means a fast and furious breakout/breakdown. For the entire
week, the setup was a massive feedback loop consisting of higher lows and the
major resistance of 1907.5. A sustain break above that level would setup the
squeeze and buyers chase the bull train
During the day
session open, there was a 5min bull engulf setup forming that we noted two
minutes before the open. This paved the way for the hourly candle to become an 8EMA
bull train acceleration setup as the bulls had a straight continuation pattern
to 1900. Then, it hit the major resistance of 1907.5 and broke above the week’s
high 1910 quickly. The rest is history as it was just a simple breakout and go
pattern that grinded the 5m 20EMA/15m 8EMA train up for rest of the day. By the
end of the day, it fulfilled the smaller 100% measure move at 1930 target.
What’s next?
Daily closed at 1931.25 as a large bull bar above the daily
20EMA. Major resistances are located at 1940, 1947-1950 and 1960. The battle
between the daily bullish reversal pattern from the Jan 20 temporary bottom vs.
the established weekly bear train should be an interesting phenomenal this
week.
The Weekly/Monthly
Chart Perspective and Context
Recall, the market has been a trading range of 300-334
points for the past 3 years between 1800 and 2134 as we noted in a few of our
weekend reports. Now, the market is trying to go back to the half way point
which is located at 1967. This means that the overall context is a 3 year
trading range vs. the established weekly bear train setup. The weekly bears are
looking for a lower high/rejection at 8EMA to keep this train momentum alive.
The immediate target of the smaller measure move at 1930
from Friday has been fulfilled. The other measure at 1950 remains valid as long
as 1HR 20EMA keeps trending.
The Hourly Extreme
Overbought Signal
Currently, the signal is looking for a confirmation at
around 1940-1950 for the potential quick dip of 20-30 points. Unfortunately, we
won’t be here on Sunday night to confirm this in real-time as we have other
obligations to tend to.
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In short, weekly bears looking for a rejection this week to
keep the bear train alive and daily bulls looking to continue their short-term
assault to the immediate target of 1950. It should be an exciting week for us
as we approach this market level by level with high probability setups.
P.S. I wonder if “everyone” is still long-term (3months to
12months) bearish after last week’s action :)
