Posted 7:45 am PST.
The most important price action in today’s intraday update is the bull breakout from the opening trading range after yesterday’s wedge bottom and today’s higher low major trend reversal. Bulls will buy pullbacks and expect a second leg up. Because of the trading range open and the market still being below yesterday’s lower high and the 60 minute moving average, there might be a deep pullback. However, the odds favor a second leg up. Bears see this as an expanding triangle top and hope for another failed breakout, but the odds favor the bulls after the 5 day wedge bottom at many support areas.
Despite the major trend reversal and wedge bottom on the Emini 5 minute chart, the weekly bar closes today and there are magnets nearby. These include 1900, the open of the week, last week’s low and close, and the moving average. Today’s close determines the appearance of the weekly bar. The bears want signs of strength so that traders will be willing to short, expecting lower prices over the next few weeks. The bears want today’s close, and therefore the weekly close, to be below all of those prices. They would like the week to be a big bear bar closing on its low.
The bulls want the opposite and want the week to be a big bull candle, making traders believe that last week’s selloff was just a pullback. This will encourage other traders to buy and it could lead to another leg up.
See the weekly update for a discussion of the weekly chart.