Two inside bars, one outside, liquidity pool hit above and below that small range. Quite an interesting week for this instrument which led nowhere. The long-term trendline stays intact but everything else which was pointing to the downside is slowly disappearing.
If on Monday or Tuesday, the market breaks below Friday's low, a down move can be expected. Otherwise, I'll wait for another setup to guide me here.
Very interesting situation including a pattern which we don't see very often in the futures market. Look at the chart below.
Highlighted with orange are two unfilled gaps. They create something which in candlestick theory is called an island. What is even more interesting is that the high of this island briefly moved above the last significant top at 2.887 (09/17/2019) and then collapsed. At the same time, there was no new high in the accumulation, measured by On Balance Volume.
I am not a big fan of Japanese candlestick theory. But gaps are something worth considering.
So what now? If the second gap stay unfilled and a complex price action sell signal appears I will take it.
Like it was suggested in the last week post the Soybean Oil started its down move. But to continue further we need a fulcrum point.
Currently, the price made a lower low while the On Balance Volume made a higher low (see the purple arrows). That suggests a very short-term strength. It is happening near the support level (the blue horizontal line).
All that might lead to a move up toward 31.30 (don't expect it to be precise) which will create a fulcrum point (Piece #M24).
I will look for a price action signal to be short on that move up.
From a technical point of view, Crude Oil looks very complicated. But if on Monday the market breaks below the Thursday or Friday's low we'll have a Spearhead pattern (Piece #M17) suggesting a short signal. An inside day on Monday and a break on Tuesday can also be interpreted as a short signal but this is something we need to watch.
My short-term COT setup (Piece #M20) is suggesting a decline can be expected in Soybean Meal.
On the chart, blue lines are marking two divergences between price and On Balance Volume (green indicator below the chart). Both of them suggest weakness.
The price broke and hold above the last point with a significant volume. A sharp turn and break below Friday's low should trigger further weakness. If I see a price action signal here, I will take it.
No recession is coming in the next few months. We are at the best seasonal time. So S&P500 can be expected to hit the target zone 3150-3200.
Friday's price action suggests we can see some weakness here. I'll be looking for buy signals.
Founder of Piece of Trading
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