Posted 8:15 am PST.
The key feature in today’s intraday update is that today is the day after a strong breakout about the top of the weekly channel. Since yesterday was a buy climax, today most likely will be a trading range. The bulls want follow-through on the daily chart after their breakout above the top of the weekly channel, and the bears want a reversal down for a failed breakout. Usually, the first reversal down is bought and the market needs a small double top before there is a significant move down to the bottom of the weekly channel. However, there is a 2/3 chance of a test of the bottom of the channel over the next month or two. There are several trendlines below on the weekly chart and the first target is the one that is around 1900.
The market is near the end of that bullish seasonal tendency…75% of the time, the close on July 5 (July 3 this year) is above the close of June 24.
The 5 minute chart went always in long at 6:40 am and then had a higher low major trend reversal at 7:20 am. This was the second entry (an ABC pullback from the 6:40 am bull reversal). However, there has been weak follow-through after every bull and bear trend bar, which is trading range price action, and this increases the chances that today will be mostly in a trading range.
The market reversed down sharply at 8:10 am and formed a double top with the 12:20 lower high from yesterday. The bears want the double top to trigger by the market falling below the neckline, which is the low of the day. They then want a measured move down to below the 60 minute moving average. More likely, today will remain a trading range day. The bulls want a bull channel and a close above yesterday’s high to confirm the breakout above the weekly channel. If there is a strong breakout up or down with good follow-through, the market will convert into a trend. Until then, breakouts up and down will fail.