9/5/25 Start of 2-Legged Sideways to Up Pullback? Bulls Need FT

1. Thursday's candlestick (May 8) was an outside bull bar closing near its high.
   
2. In our previous report, we said the market could still trade at least a little lower. Traders would see if the bears could create another follow-through bear bar, or if the market would trade lower, but the candlestick closes with a long tail below or a bull body.
   
3. The market traded slightly lower, but reversed to close as a big bull bar with a prominent tail below.
   
4. The bears want a strong breakout below the January low, followed by a measured move based on the height of the 5-month trading range, which would take the market to the 3200 area.
   
5. If the market trades higher, the bears want it to stall around the 20-day EMA (around 3950), forming a double top bear flag.
   
6. They want the pullback to be weak and sideways (overlapping candlesticks, bear bars, doji(s), and prominent tails above candlesticks).
   
7. The bulls want a reversal from a lower low major trend reversal and a wedge pattern (Apr 9, Apr 22, and May 8). They want a failed breakout below the January low.
   
8. They hope to get at least a small two-legged sideways to up pullback lasting a few days. The pullback phase may have begun.
   
9. Since Thursday's candlestick was an outside bull bar, the bulls need to create a follow-through bull bar to increase the odds of testing near the 20-day EMA.
   
10. They want a TBTL (Ten Bars, Two Legs) Pullback, lasting about 2 weeks.
    
11. The market broke out below the January low on Monday with follow-through selling on Tuesday and Wednesday.
    
12. Thursday's candlestick traded lower but reversed into an outside bull bar.
    
13. While the selloff since April 2 was strong, the move has lasted a long time and is slightly climactic.
    
14. The wedge pattern increases the odds of a small 2-legged sideways to up pullback.
    
15. So far, the market has traded slightly higher in the night market.
    
16. Traders want to see if the bulls can create sustained follow-through buying tomorrow. If they can do that, the odds of a 2-legged sideways to up pullback will increase.
    
17. For tomorrow (Friday, 9/5/25), traders will see if the bulls can create a follow-through bull bar.
    
18. Or will the market trade higher, but the candlestick closes with a long tail above or a bear body instead? If this is the case, it would mean strong bears and weak bulls.
    
19. Breakouts from trading ranges can fail, and odds slightly favor the trading range to continue until there is a strong breakout with sustained follow-through selling/buying.
    

Andrew