Markets today gaped higher and rallied for the first 28 minutes of trading before consolidating the rest of the day. We did get a pop into the lunch hour to fill the 2052.23 gap, but most of the excitement occurred pretty quickly in the morning.
Lucky for me, I got long in the after hours and overnight so was able to just take profits at the 2043 price target, which I did. I don’t bullshit you guys with my analysis. The combination of the oversold conditions, the red dog reversal and the 3rd bullish pattern triggering into the close was enough for me to place my bets with low risk high reward.
While many are worried about this and that rate hike, the price action is all that matters end of story. Even if you are a “Long Term Investor”!!!!!
Where does that leave us?
Honestly given what we know at this very second, in a pretty bullish posture.
1) The bulls have defended the bullish double bottom Cup/Handle targeting 2169.81
2) on the 15 minute chart, we have a close above the 61.8 Fib retrace and the potential for a cup/handle targeting 2106.96
Now if we want to be bearish, we can look for 2 things.
1) A move below the 61.8 fib ~2039. But only if we are below that, if we are back above, we can’t be in the short trade.
2) A failed breakout of the 2050.11 . i.e we breakout, and roll back over pretty quickly. This will be a “Bull trap” and from failed moves come fast moves. You would then be short only below the failed breakout level.
In both conditions, we can be whipsawed for sure, but that is trading. The easier trade here is the long side because the technicals are at your back with the double bottom still in motion, oversold conditions, and the potential for a cup handle above today’s highs.
THE BOTTOM LINE : The market currently has a double bottom cup/handle still in motion as it was successfully defended with this bounce. We have completed 3 bullish price patterns and appear to possibly be constructing a 4th targeting 2106.96. Watch for breakout of failure of these patterns in order to run bearish. Now assuming things get ugly, remember we have the 61.8 fib retrace at 1965ish. That may act as a level of support. So do keep that in mind. There is a ton to think about, but this is stuff we as traders must think about and prepare for on a daily basis so we know what to do, when things get fast and hot. Looking forward to an exciting day tomorrow.