- Thursday’s candlestick (Jul 24) was a bull doji closing slightly below the middle of its range with a long tail above.
- In our last report, we said the odds slightly favor sideways to up. Traders would see if the bulls could create follow-through buying, breaking above the July 18 high, or if the market would stall around or below the July 18 high area and trade lower instead.
- The market broke above the July 18 high, but reversed to close off the day's high.
- The bulls want a retest of the April high.
- The current move up is in a bull channel with overlapping candlesticks. They want the bull channel to continue.
- If there is a pullback, they want it to lack follow-through selling, similar to the last few pullbacks (July 7, July 11, July 15, and July 22).
- The bulls need to create a strong breakout above the July 18 high with follow-through buying to increase the odds of a sustained move.
- The bears want a reversal from a large wedge pattern (May 15, Jun 20, and Jul 24) and a trend channel line overshoot. They want a major lower high vs the April high.
- They view the current move as a retest of the prior high (Jul 18), and want it to form a higher high and a double top with July 18.
- The problem with the bear's case is that they have not been able to create follow-through selling in the last four selloffs (July 7, July 11, July 15, and Jul 22). The bears are not as strong as they hoped for.
- They need to create consecutive bear bars closing near their lows to show they are at least temporarily back in control.
- Production for July is expected to be around the same level as June or slightly higher. August may be flat or slightly lower.
- Refineries' appetite to buy looks decent recently.
- Export: Down 3% in the first 20 days.
- So far, the buying pressure is slightly stronger than the selling pressure. The bulls have a slight edge in buying pressure, but not in an overwhelming way yet (no strong consecutive bull bars closing near their highs).
- The bears need to create strong bear bars with follow-through selling to show they are back in control.
- For now, I reckon odds slightly favor sideways to up.
- For tomorrow (Friday, July 25), traders will see if the bulls can create follow-through buying. If they can, the weekly candlestick will close near its high, which will increase the odds of next week trading at least a little higher.
- Or will the bears be able to create a strong pullback instead? If this is the case, the weekly candlestick may close with a bear body, which will create more doubts and uncertainty.
Andrew
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