Friday’s session was very similar to the previous week’s Wednesday Oct
21 session; they both went above the previous day’s high and then reversed as a
bearish engulfing daily candle. It was a standard textbook hourly breakdown overnight
with throwback retest during the day session. Then, it had the bear
continuation after lunch and closed at the important dotted yellow line
support.
What’s next?
Daily closed at 2074, this is the 7th consecutive
session above the daily 200SMA. It was a bearish engulfing candle just like the
October 21 session. Bears need a decisive follow through early next week to
confirm the bearish rejection setup.
Weekly candle closed as a spinning top, which means the
weekly bulls momentum is not as strong as the previous 4 weeks which ended
their weeks closer to the highs.
Monthly bulls were unable to close above 2107, which means
bears still have a shot for the medium probability of inside month
consolidation range setup during November. If swing bulls are serious, there
should be no retrace that extends further than 61.8% fib retracement of the
October monthly bar which is at 1963.89. If bears fail, then it's straight bull
continuation up setup.
Riding the bull train till it dies. Bears need to confirm
the bearish engulfing setup just like the October 21st setup.
(Remember, October 22 was a massive squeeze to the daily 200SMA)
Once again, as long
as the bull train remains above 2065, the immediate targets are 2089.50, 2100
and 2107.
For short-term bears:
Break below 2065, then immediate targets are 2055, 2050, 2040 and 2030.
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Plan for the first
couple sessions of next week:
Be prepared for short-term trend change and changing up our
strategy to short every hourly moving average retest if bears confirm the trend
reversal. Until then, continue to BTFD until it does not work anymore. We’re
going to use smaller position sizes in this upcoming week until something
confirms, protecting profits from previous weeks is pivotal.
Roadmap and thoughts:
Generally speaking, from trading various instruments over the years
we’ve noticed that when a retracement on a daily chart closes above/below 78.6%
then a full retracement to the 100% becomes very likely eventually. However, we
do not have the relevant backtest system to prove this in a statistical manner.
Bulls really need to close above 2069.16/2070.
The first try at Daily 20EMA is a BTFD setup
Even if bears manage to reverse next week or within these two weeks;
daily bulls have a first try BTFD setup at daily 20EMA setup just like how
first try hourly 20EMA was a BTFD setup during Friday’s day session. We count
this rally from the 1861 vs 1861.5 hourly bottom to 2065 as Leg 1. The bounce
has never had to retest the daily 20EMA yet, but retested the daily 8EMA 3
times and bounced off it. This means it has been a massive bull squeeze run
that the very first dip to 20EMA should sticksave. However, just because first
try BTFD at daily 20EMA is a great setup ,it does not mean it has to be a daily
chart scale bounce (50-100 points). It could just be an intraday 20-30 points
bounce then retest the daily 20EMA again if bears manage to have that much
conviction.
Our Swing Position
Nothing has changed from Thursday’s update.
However, the IWM Dec ITM Calls will get stopped out if IWM
trades below 113.90.
