• The daily candlestick was a bear bar with a prominent tail below, closing above the March 4 low.
• The market gap lower at the open and formed a pullback (bounce) in the first two hours. The market then reversed lower to retest the March 4 low and broke below it. The breakout lacked follow-through selling and stalled around the March 4 low area.
• The bulls see the market trading in a broad bull channel and want the move to continue for months. They want an endless pullback bull trend.
• They want a retest of the all-time high (Dec 6) followed by a breakout and trend resumption. They see the current move (Mar 6) as a bear leg within the trading range.
• They want a reversal from a double bottom bull flag (Jan 13 and Mar 6), a wedge bull flag (Nov 9, Jan 13, and Mar 6) and a wedge (Feb 25, Feb 28, and Mar 6).
• They hope the bottom of the 22-week trading range will act as support. They want a failed breakout below the January 13 low.
• At the least, they want a retest of the middle of the trading range (around the 20-day EMA).
• They must create consecutive bull bars closing near their highs to show they are back in control.
• If the market trades lower, they want the November 4 or October 3 low to act as support.
• The bears got a reversal from a higher high major trend reversal, a wedge top (Dec 6, Jan 24, and Feb 19), and a smaller double top (Jan 24 and Feb 19).
• They see the market as being in a 22-week trading range.
• They got a bear leg to retest the January 13 low and hope to get a breakout followed by a measured move based on the height of the 22-week trading range.
• So far, the breakout below the January 13 low is not yet strong.
• The move down is in a tight bear channel which increases the odds of at least a small second leg sideways to down after a pullback.
• The move down has a lot of overlapping candlesticks which also indicates that the bears are not yet as strong as they hoped to be.
• If the market trades higher, they want the bear trend line or the 20-day EMA to act as resistance followed by a retest of the recent leg extreme low (now Mar 6).
• So far, the market is trading in a 22-week trading range.
• The SPX broke below the January 13 low (Mar 6) but the follow-through selling is still somewhat limited.
• The selling pressure in the move down is stronger (consecutive bear bars, bigger bear bars) than the weaker buying pressure (bull bars with no follow-through buying).
• The move down is strong enough for traders to expect at least a small second leg sideways to down after a pullback (bounce).
• For now, traders will see if the bears can continue to create follow-through selling below the January 13 low.
• Or will the market stall around the current levels and form a minor pullback (bounce) instead?
• The bulls need to create consecutive bull bars closing near their highs to show that they are back in control.
• The bears must create a strong breakout below the January 13 low with follow-through selling to convince traders that a breakout could be underway.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.