- Last Friday's candlestick closed as a bull bar near its high. The market opened lower but lacked follow-through selling and traded sideways to up for the rest of the day.
- In our last report, we said that traders would see if the bears could create a strong bear bar, or if the market would open lower but lack follow-through selling, like Thursday.
- The bulls want the market to form a 2 legged sideways to up pullback.
- The pullback currently has more bull bars vs bear bars with no follow-through selling. The bulls are stronger.
- The next targets for the bulls are the 20-day EMA, 200-day EMA or the January 13 low.
- The market has formed 3 pushes up (including today's gap up) with the first two legs being the Mar 17 and Mar 19 high.
- If there is a pullback, the bulls want at least a small sideways to up leg to retest the current leg high (Mar 24).
- The bears see any pullback as minor. They expect at least a small second leg sideways to down to retest the Mar 13 low after the pullback phase.
- The strong move down slightly favor the first pullback to be minor and not lead to a reversal up.
- They were not able to create follow-through selling on Mar 18 and Mar 21.
- They must create strong bear bars with follow-through selling to increase the odds of another leg down.
- The prior climactic selloff and parabolic wedge increase the odds of a pullback which is underway.
- Traders will see the strength of the pullback. If it is strong (consecutive bull bars closing near their highs), they may look for a retest of the 20-day and the breakout point - Jan 13 low.
- If the pullback lacks follow-through buying (overlapping candlesticks, doji bars, bear bars, long tails above bars), the odds of another leg down AFTER the pullback phase increase.
- For now, the buying pressure is stronger than the selling pressure (bear bars with no follow-through selling).
- Odds slightly favor the market to still be in the sideways to up pullback phase.
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