- Tuesday’s candlestick (Jan. 14) was a bear bar closing below the middle of its range with long tails above and below.
- In our last report, we stated that traders would watch to see if the bulls could create a strong breakout above the 13-day tight trading range around the 20-day EMA, or if the market would trade higher, but close with a long tail or a bear body instead - a breakout pullback or a possible breakout failure.
- The market traded higher in the morning session, but sold off in the afternoon, testing the 20-day EMA. The market closed off its low in the last hour of the day, indicating the bears are not yet decisively strong.
- Bulls hope the selloff (Dec 19) will form a major higher low relative to May 2025.
- They hope to get a reversal from a large wedge pattern (Jan 17, May 8, and Dec 19) and a smaller wedge pattern (Nov 3, Nov 26, and Dec 19).
- They want a reversal from a lower low major trend reversal (relative to November 26) and now a smaller higher low major trend reversal (relative to December 25), followed by a measured move to around the 4200 area based on the height of the recent 13-day trading range.
- They need to create strong consecutive bull bars trading far above the 20-day EMA to show they are back in control.
- They view yesterday (Tuesday, Jan. 13) as a breakout pullback test of the 20-day EMA and hope it was a bear trap.
- They want the 20-EMA to act as a support level. So far, this appears to be the case.
- The bears got the third leg down to form the wedge pattern (November 13, November 26, and December 19).
- They want a retest of the December low from a double top bear flag (Dec 30 and 9 Jan) at the 20-day EMA, even if it only forms a higher low. The recent retest has a higher low (Jan 5).
- If the market trades higher, they want the December 3 high area to act as resistance. They want another major lower high relative to January 3.
- Fundamentals:
- • Production: Production for Jan - SPPOMA first 10 days -20%
- • Refineries: Buying interest is there at these low prices. Not paying premiums vs spot futures - yet.
- • Exports: ITS first 10 days +29%.
- Today (Wednesday, Jan. 14), traders will watch to see if the bulls can create a strong retest and breakout above the January 13 high.
- Or will the market trade lower to retest the 20-day EMA again and close below it?
- So far, the 20-day EMA continue to act as support, but the bulls have not yet shown decisive consecutive strong bull bars.
Andrew
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