Tuesday Evening 8 June 2010
Price is at the lower end of potential support, so it would be tenuous to
go short here. The support is potential and not proven, so it makes no
sense to go long here. The solution? Wait for the market to declare
itself, and then act with greater knowledge and confidence of being in
harmony with the trend.
The 1040 area has been acting as support, and price has been retesting
it the past few days. If support is to hold, price should be rallying away
from it with wide range and increased volume. The longer price remains
close to known support, the less likely it will hold. It all goes back to HOW
price responds or fails to respond to a known support or resistance area.
Monday’s range down was relatively small, saying sellers were unable to
extend price lower, through the known support. At least not then. What
we need to see now is if buyers can step up and take advantage of this
opportunity. If the response from buyers results in a weak rally, the 1040
support area will not hold.
Tuesday was a brief reprieve for buyers. By the end of the trading day,
price managed to rally toward the highs of the day. HOW strong was the
rally, and was it enough to carry over to Wednesday and beyond?
This is the 60 minute intra day chart. It shows a qualitative difference from
the other lows in one aspect. The bars are relatively wider range, and they
overlap. That kind of activity demonstrates a battle between buyers and
sellers. That a battle existed does not speak well for the sellers who have
been dominant and had the buyers at their mercy. Not shown, but on the
intra day chart there was support at the 1040 area from a reverse trend line.
The two highest volume bars for the 8th represent the second and third
hours of trade, the red volume bar for the lower close on the second hourly
period, and the green volume bar for the third hour which was an outside
key reversal, [OKR], a lower low, a higher high, and a higher close. At
resistance, an OKR is a sign of weakness; at support, an OKR is a sign of
strength, and this one occurred at a support level.
There was a flurry of buying during the last hour, [second to last bar…the
last bar is the 15 minute activity on the E-Mini from 3:00 to 3:15 p.m.].
The battle of the day went to the buyers for a higher close from Monday
and the close at the upper range of the daily bar. Was it enough to keep
the battle going, or will upside follow-through be lacking and lead to the
breaking of not only support but the entire bullish rally from March 2009?
Price needs to get above 1070, and hold. Then buyers must show an
ability to continue the rally and get above 1106. The overall trend is biased
to the downside. If there is no sustained rally, the bias will become a
confirmed down tend with staying power, 1,000 being the next target.
