(click image to enlarge chart)
Yesterday’s price action was a textbook example of what I was talking about in the previous post about false trend line breaks followed by a sharp reversal after stops have been run–and is typical trading range activity.
They got the close in bull stops on the false trend line break of the purple trend line. That trade is illustrated by the small yellow highlight at the dotted green trend line break—and then down to the larger yellow highlight oval where the stops were taken (under the dotted purple trend line) followed by a reversal back inside the triangle.
Notice that the upside push stopped just shy of hitting the price where the VST counter-trend sell occurred (illustrated by the small yellow oval at the dotted green trend line). That holds those bears in the trade who missed the cover opportunity below the purple trend line break. A push up and through that level could take out the day trading bears both at that line and on the other side of the red descending trend line.
The next easy prize would seem to be taking those close-in bear stops mentioned in the paragraph above to achieve the mirror trend line break—but we’ll see.
The next area of major upside resistance (in my opinion) is near 1125-1128 area (illustrated by the yellow rectangle in the image above).
On a closing bar basis, the trends remain up in all time frames here after enduring several intraday tests of the recent IT and ST trend change on February 16–but price remains near the center of the current trading range between 1056-1145 so some volatility is expected and fast moves can occur in either direction.
The gray ST trident channel remains the current dominant technical feature (in my opinion) and there is an interesting confluence of the trend channel top with the major resistance area near 1125-1128 (mentioned in a previous post) that could be the next target of a push higher, if one transpires.
An eventual test of the trading range (roughly bound by the ST gray trident channel) is the primary interest here in the ST and could lead to a decent VST trade setup at a touch of either the top or bottom rail of the gray trident.
The current VST line of interest here is the red trend line with likely bear stops resting on the other side. It will be interesting to see if price accelerates higher to the trend channel top if a breakout of that line occurs—or if it again retreats after (if) stops are taken. The opposite corollary to yesterday applies here…a true VST trending move likely will break the line and continue to run without violating the breakout line on a pullback.
If the current push higher stalls and reverses–a move lower from here could initially target intratrend support near the 1080 area.
…my .02