Investors had hoped that the worst was behind them, but the momentum on Friday has triggered what could very well be a two-wave continuation pattern on the downside on the weekly time frame in the indices.
On Friday, the market is favoring congestion in the morning, followed by upside once again into the afternoon. Monday's highs will serve as the resistance zone in both the Dow and Nasdaq Composite, while last Wednesday's and Thursday's highs will be strong resistance for the S&P 500.
The market is looking bullish into the open on Thursday. The 60-minute time frames were all hitting support Wednesday afternoon and favoring a larger bounce off those support levels.
The market remains in a corrective stage on the daily time frame heading into Wednesday. The market should open up, Toni Hansen writes, as compared to Tuesday's action and offer some more decent intraday moves.
The market is favoring a bit of upside in the morning, but the larger bias is now somewhat more bearish due to the series of slightly higher highs on the 60-minute time frame.
The indices are favoring a continuation of this relatively sideways congestion zone on th 60-minute charts as the week begins, but the market bias as a whole remains bullish at this point.
Toni Hansen beleives that a move into the upper end of the daily range and then another pull off it would be best for a larger breakout to highs in a week or so.
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