- Wednesday’s candlestick (Nov 26) was a bull bar closing in its upper half with a prominent tail above.
- In our previous report, we stated that traders would watch to see if the bears could create more follow-through selling and extend the second leg sideways to down, or if the market would stall around the 4000 area and form candlesticks with long tails below in the days ahead, which could indicate some profit-taking activity.
- The market traded slightly lower but closed higher for the day and is holding around the 4000 area for now.
- The bulls hope the current decline will form a major higher low.
- They hope the recent tight trading range will be the final flag of the move and want the market to reverse back into the tight trading range.
- At the least, they hope for a small pullback to the 20-day EMA.
- They must produce strong consecutive bull bars to show they are clearly in control.
- The bears reached the measured-move target of the 4000–3950 area this week.
- The next target for the bears is the May low, around the 3800-50 area.
- The selloff formed a tight bear channel, indicating strong bearish sentiment and persistent selling pressure.
- If there is a pullback, the bears want the 20-day EMA to act as a resistance level.
- They want any pullback (bounce) to be weak, characterized by overlapping candlesticks and a long tail extending above.
- Fundamentals
- • Production: SPPOMA increased by about 5% in the first 25 days.
- • Refineries: Buying interest is still there at these low prices. Not paying premiums vs spot futures.
- • Exports: ITS said exports are down 18.48% in the first 25 days.
- Overall, the market sold off in a tight bear channel, indicating strong selling momentum.
- The market remains Always-In-Short.
- The selloff was also climactic and slightly oversold. There could be a minor pullback towards the 20-day EMA, which may have begun yesterday.
- Today (Thursday, Nov. 27), traders will watch to see if the bulls can create a consecutive bull bar closing near its high.
- Or will the market trade slightly higher, but the candlestick close below the middle of its range with a long tail above?
Andrew
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