Today was a very healthy up day with some consolidation mid day, but more so … exactly what I had hoped for (from yesterday’s post), a downward movement of a few percent, then a move up to reverse the downside and close at the top of the day’s range.
To test new lows and quickly rebound and close the day at the highs is very constructive price action and speaks loudly to the players that the market wants to go up.
With that said, we still have the resistance over us that I spoke about over the past few days, so until we clear these hurdles caution should be used. We are also still overbought, although less so than we were two days ago. I did enter some long trades, but relatively light. I assume we will consolidate for a few days with little upside or downside … then we should be able to continue up. My guess is that the rest of this week will see little movement and next week we can start moving up.
Given the Euro news going on today and tomorrow, I’m actually surprised that we saw such positive action today, not that I was expecting negative action, but I wasn’t expecting such a strong positive movement. I assume most market players are expecting a positive outcome out of these talks, which could work against us if the talks fail tomorrow.
Bottom line, I like what I see, I just want these hurdles to be surpassed for myself to be fully bullish.