- Friday’s candlestick (Aug 8) was a bull doji closing in its lower half with a long tail above.
- In our last report, we said traders would see if the bulls could create a strong bull bar breaking above the August 5 high, or if the market would trade higher but stall around or below the August 5 high, closing with a long tail or a bear body instead.
- The market tested near the Aug 5 high but reversed to close with a long tail above.
- 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). August 4 was the same.
- They want a retest of the July 24 high, followed by a strong breakout above and another strong leg up that lasts for a few weeks.
- They see the last 10 trading days simply as a minor pullback.
- They need to create strong consecutive bull bars closing near their highs to increase the odds of another leg up.
- The bears were unable to create follow-through selling in the last four selloff attempts (July 7, July 11, July 15, and July 22). August 4 was the case again.
- They want the market to form a lower high (vs Jul 24) and a wedge bear flag (Jul 30, Aug 5, and Aug 8).
- They need to create strong 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 export up 23% in the first 10 days.
- So far, the market has formed a sideways pullback holding above the 20-day EMA.
- Traders are wondering if the pullback has alleviated the prior overbought condition.
- The market has formed a trading range over the last 24 trading days. The market is currently trading around the middle of the trading range, which is an area of balance.
- For tomorrow (Monday, Aug 11), traders will see if the bears can create strong bear bars trading far below the 20-day EMA.
- Or will the market trade slightly lower, but lack follow-through selling (again), followed by a reversal above the 20-day EMA in the next few days instead?
Andrew
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