23/9/25 Strong Breakout from Tight Trading Range

1. Monday’s candlestick (Sept 22) was a bull doji closing in its lower half with a long tail above.
   
2. In our last report, we stated that traders would see if the bears could create follow-through selling below the 20-day EMA, or if the move would lack follow-through selling (again), reversing above the 20-day EMA later in the week.
   
3. The market traded higher to test the 20-day EMA but reversed and closed below it. The market gap down and sold off during the night session.
   
4. The bulls see the current move as a deeper pullback.
   
5. They want the pullback to lack follow-through selling, as has been the case with all recent pullbacks (July 1 and August 4).
   
6. They must create strong bull bars to show they are back in control.
   
7. The bears view the move (Sep 17) as forming a larger double top bear flag (Sept 9 and Sept 17).
   
8. They got a breakout below the recent tight trading range, trading below the 20-day EMA and the bull trend line.
   
9. They need sustained follow-through selling to increase the odds of a strong reversal.
   
10. Production for Sept should be flat or down. Oct's production should be flat to down as well.
    
11. Refineries' appetite to buy remains decent.
    
12. Export: Sept: First 20 days +8% per ITS.
    
13. So far, the bears have managed to break out of the tight trading range. The market could still trade sideways to down for now.
    
14. For tomorrow (Tuesday, Sept 23), traders will see if the bears get a strong bear bar closing near its low. If this is the case, the market could still trade lower on Wednesday.
    
15. Or will there be a prominent tail below the daily candlestick, indicating some profit-taking activity?
    

Andrew