- Friday’s candlestick (Sept 26) was an outside bear bar closing near its low with a long tail above.
- In our last report, we stated that traders would see if the bulls can create strong follow-through buying, closing above the 20-day EMA, or if the market would stall around the 20-day EMA (around the 4450 area), closing below the 20-day EMA instead.
- The market traded higher to test the 4450 area but lacked follow-through buying, reversing to close below the 20-day EMA.
- The bulls view the recent move as a deeper two-legged pullback and want a reversal from a large double bottom bull flag (Aug 29 and Sep 23).
- They want the pullback to lack follow-through selling, as has been the case with all recent pullbacks (July 1 and August 4). So far, this appears to be the case.
- They want the move (Sep 23) to turn into a bear trap.
- They want the breakout from the trading range to fail, reversing back into the trading range (around the 4450 area).
- They want a retest of the August high, even if it only forms a lower high.
- They must create follow-through buying above the 20-day EMA to increase the odds of the market trading higher.
- The bears got a deep pullback and a breakout below the tight trading range, but the move lacked sustained follow-through selling.
- The bears hope that the current move (Sept 26) is a retest of the breakout point.
- They want the 20-day EMA to act as resistance, followed by at least a small sideways to down leg to retest the Sept 23 low.
- They need to create strong follow-through selling early next week.
- Production for Sept should be flat or down. Oct's production should be flat to down as well.
- Refineries' appetite to buy remains decent.
- Export: Sept: First 25 days +12% per ITS.
- The monthly candlestick will close after Tuesday's session. The bulls want the monthly candlestick to close with a bull body, while the bears want a bear body.
- The next two trading days will determine whether the monthly candlestick will close bullish, bearish or neutral.
- For tomorrow (Monday, Sept 29), traders will see if the bears can create strong follow-through selling testing near the Sept 23 low.
- Or will the move lack follow-through selling, followed by a reversal above the 20-day EMA instead?
Andrew
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