- Thursday’s candlestick (Aug 21) was an outside bear bar closing in its lower half with a long tail above.
- In our last report, we stated that traders would observe whether the bulls could create a strong retest of the August 19 high, or if the bears would be able to establish a lower high (compared to August 19) and a second leg sideways to down.
- The market traded higher but lacked follow-through buying. The bears got a second leg sideways to down.
- The bulls want another strong leg up that lasts for several weeks.
- They want any pullback to be weak and sideways, lacking follow-through selling, as has been the case with all recent pullbacks. So far, this appears to be the case.
- They want a retest of the August 19 high followed by a strong breakout above it.
- If the market trades lower, they want the 20-day EMA to act as support.
- The bears want a reversal from a wedge pattern (June 20, July 24, and August 19), and a large double top bar flag with the February high.
- At the least, they want a two-legged pullback.
- If the market trades higher, they want it to stall below the August 19 high, forming a small double top.
- They want the Feb high area to act as resistance.
- They need to create strong follow-through selling to increase the odds of a reversal.
- Production for August may be flat or down. Sept should be flat or down as well.
- Refineries' appetite to buy remains decent.
- Export: August export up 13% in the first 20 days.
- So far, the buying pressure is stronger (consecutive bull bars) compared to the weaker selling pressure (bear bars with no follow-through selling).
- The market formed a pullback after testing the February high.
- Traders are wondering if the current pullback would be minor (lacking follow-through selling) like all recent pullbacks, or if the bears would finally be able to create strong consecutive bear bars instead? Traders will continue to monitor the next few days.
- So far, the pullback has an overlapping range and appears to be minor.
- For tomorrow (Friday, Aug 22), traders will see if the bulls can create a strong retest of the August 19 high. If they can, the weekly candlestick will close near its high, which will increase the odds of next week trading at least a little higher.
- Or will the bears be able to get a lower high (vs Aug 19) and another sideways to down again? If the bears can get a strong bear bar, the weekly candlestick will close with a big bear body, which will reduce the recent bullishness.
Andrew
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