Although the market was oversold coming into Monday, it took another day for it to rally.
It did Spring (A) and Test (B) Friday’s low, but supply soon swamped demand on the wave down to C, forcing an exit to longs. As I mentioned in Sunday night’s post, it is important to maintain a flexible attitude. With the supply swamping demand, the inability to reach Friday afternoon’s resistance level, and a flexible mental approach to the market, small Upthrusts at E and F offered short opportunities.
The anticipated rally began prior to the US session on the large wave up to G. Good demand came in after the US open and an opportunity for a long trade came at H. By I, the market became overbought, and at J, we knew the up move for today was over with the Upthrust.
I anticipate that the market will attempt to hold today’s and yesterday’s lows. I would be looking for a buy opportunity on any dip back down into that area that occurs without an increase in supply.
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