- Monday’s candlestick (Aug 4) was a bull doji closing around the middle of its range with prominent tails.
- In our last report, we said the market may gap down at the open. Traders would see if the bears could create follow-through selling, closing the day near its low, or if the market would lack follow-through selling and close with a long tail below or a bull body instead.
- The market gapped down and traded lower, but the follow-through selling was limited, closing the day with a bull body.
- The bulls want any pullback to lack follow-through selling, similar to the last few pullbacks (July 7, July 11, July 15, and July 22).
- They see the current move as a two-legged pullback. They want the 20-day EMA or the bull trend line to act as a support level. So far, this appears to be the case.
- They want another strong leg up to form the wedge pattern, with the first two legs being Jun 20 and July 24.
- They need to create follow-through buying over the next few days to increase the odds of higher prices.
- The bears want a reversal from a large wedge pattern (May 15, Jun 20, and Jul 24) and an embedded wedge (Jul 14, Jul 18, and Jul 24).
- Previously, the bears were unable to create follow-through selling in the last four selloff attempts (July 7, July 11, July 15, and July 22). Would it be the case again this time?
- If the market trades higher, they want another leg down to form the wedge pattern (the first two legs being Jul 29 and Aug 4).
- They need to create consecutive bear bars closing near their lows and trading below the 20-day EMA to show they are back in control.
- Production for August may be flat or down.
- Refineries' appetite to buy looks decent recently.
- Export: August demand remains to be seen.
- Previously, the buying pressure was slightly stronger than the selling pressure, but not in an overwhelming way yet (no strong consecutive bull bars closing near their highs).
- The move up lasted a long time without a significant pullback. The market may have to form a pullback before it moves higher again. The pullback phase is still underway.
- Traders will assess the strength of the pullback to determine whether it will be a minor correction or a more significant event. So far, the pullback appears to be minor.
- The bears need to create follow-through selling to show they are back in control, something they couldn't do in the last few pullbacks (July 7, July 11, July 15, and Jul 22). So far, the follow-through selling still appears to be limited
- For tomorrow (Tuesday, Aug 5), traders will see if the bulls can create a strong bull bar closing above the 20-day EMA.
- Or will the market trade higher but close with a long tail above and below the middle of its range instead?
Andrew
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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.