- Yesterday's candlestick closed as a bull bar in its lower half with a long tail above.
- In yesterday's report, we said traders would see if the bulls could create a strong retest of yesterday's (Mar 19) high followed by a breakout above. Or if the retest would lack follow-through buying, stalling around or slightly above yesterday's high area.
- The market formed a retest of the March 19 high, but stalled and formed a lower high.
- We said the move while strong, likely was simply a bull leg and a buy vacuum test of the trading range high. If true, sellers would emerge near the trading range high, which was the case. (Please refer to the tagged post)
- The bulls want the market to form a 2 legged sideways to up pullback.
- The pullback is currently underway but has a lot of overlapping candlesticks. The bulls are not yet as strong as they hope to be.
- They need to create credible buying pressure - consecutive bull bars closing near their highs to increase the odds of testing the 20-day EMA or the January 13 low.
- For today, the market may open lower today. If the market continues down, they hope the March 18 low will act as support, forming a small double bottom bull flag.
- 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 9-bar bear microchannel on the daily chart and the 4-bar bear microchannel on the weekly chart increase the odds that the first pullback (current pullback) would be minor and not lead to a reversal up.
- They hope the leg to retest the March 13 low will begin soon. They must create strong bear bars with follow-through selling to increase the odds of another leg down.
- The prior climactic selloff and parabolic wedge increase the odds of a pullback which is underway.
- Traders will see the strength of the pullback. If it is strong (consecutive bull bars closing near their highs), they may look for a retest of the breakout point - Jan 13 low.
- If the pullback lacks follow-through buying (overlapping candlesticks, doji bars, bear bars, long tails above bars), the odds of another leg down AFTER the pullback phase increase.
- So far, the pullback has a lot of overlapping candlesticks which indicates that the bulls are not yet as strong as they hope to be.
- For now, traders will see if the bears can create a strong bear bar today.
- Or will the market open lower but lack follow-through selling, like yesterday?
- I will update again later today.
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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.