- The market tested the 20-day EMA and the January 13 low in the last 2 trading days.
- In our last report, we said the buying pressure is stronger than the selling pressure (bear bars with no follow-through selling) and the odds slightly favor the market to still be in the sideways to up pullback phase.
- The bulls want the market to form a 2 legged sideways to up pullback testing the 20-day EMA, 200-day EMA or the January 13 low. They got what they wanted.
- The pullback currently has more bull bars vs bear bars with no follow-through selling. The bulls are stronger.
- The market has formed 3 pushes up, therefore a wedge (Mar 17, Mar 19, and Mar 15).
- If there is a pullback, the bulls want at least a small sideways to up leg to retest the current leg high (Mar 25) after that, forming a larger double top bear flag.
- The bulls must continue creating follow-through buying above the 20-day EMA to increase the odds of testing the March 3 high (start of the bear channel).
- The bears see any pullback as minor. They expect at least a small second leg sideways to down to retest the Mar 13 low after the pullback phase.
- The strong move down slightly favor the first pullback to be minor and not lead to a reversal up.
- They must create strong bear bars with follow-through selling to show that they are back in control.
- They want the 20-day EMA and the Jan 13 low to act as resistance.
- The prior climactic selloff and parabolic wedge increase the odds of a pullback which is underway.
- For now, traders will see if the bulls can continue to create follow-through buying above the 20-day EMA, or will the market stall around the current levels instead?
- If there is a pullback, traders will see if the bulls can create a retest of the current leg high (now Mar 25) and the strength of the retest.
- If it is weak and is a lower high, another sideways to down leg to retest the March 13 low will increase.
- For now, the market may still be in the sideways to up pullback phase.
- But the wedge pattern is increasing the odds of a small pullback.
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Related publications
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.