This sort of looks like a broadening wedge, a potentially very bearish pattern that gets everyone bullish right at the peak of the wedge.
And here is Al Brooks latest analysis:
https://www.brookstr...tive-bull-bars/
What happens if there is a new high next week? The bulls want the bull trend to continue forever. That is not going to happen. The next reasonable targets are the measured move up from the 3-month trading range at 4,404, the top of the bull channel at around 4,500, and the measured move up based on the height of the pandemic crash at 4,537.
E-mini has been trading sideways in July. In trading ranges that resist breaking out. Therefore, there might be more sellers than buyers at the new high, which would be a break above the trading range. I have been saying that July will probably have a bear body on the monthly chart when it closes next Friday. It could make a new high and then sell off to below the open of the month before the month ends next Friday.
The more the reversal up continues, the more likely the bulls will get a sixth consecutive bull bar on the monthly chart. That has not happened in 10 years. Therefore, a seventh consecutive bull bar will be even more unlikely, which means August would then probably have a bear body.
While it is less likely after the 2-day rally, the bears still have better than a 50% chance of creating a bear body in July. The E-mini is not too far above the open at the moment. Also, next Wednesday’s FOMC announcement is a catalyst. It could lead to a big move up or down, and that means there is the potential for a move down below the open.
Horizontal purple line is the opening price of July
Vertical dotted green line is the start of July
Cyan Blue is the 50 DMA
Edited by tradesurfer, 26 July 2021 - 11:44 AM.
