Today did close in the green and a touch closer to target, but I will make it a bad call. I’m not real happy with it. I was expecting a strong day as it seemed the sellers were all gone in this game plan. It opened great, but mid-day got smacked back down. It managed to stay green, but I consider it a weak close and ended the day with a nasty little shooting star. My optimism has changed to cautious optimism.
Here is today’s action on the 15 minute chart. I had expected some weakness at the open and recovery at the end of the day. However, it opened strong and remained that way.
The first half of the day looks pretty volatile. There are several candles that are anomalies, the effort and result are not in sync. Some are big candles on small volume, and some are small on large. It’s hard to say what was going on, just that there was manipulation buy wholesale. It’s not surprising since were are sitting right at support where things start to get that way.
If this were a four hour chart, you can visualize the first half of the day would be strong on high volume and the second would be a smaller candle spread on much lower volume. I’m thinking that the first half of the day was wholesale participation accumulating shares. The second half of they day its just retail buying and selling, but wholesale is marking the price to perform a low volume test after creating morning strength. A test that seemed to pass as the price stayed up on low volume without retail driving it back down.
It’s all a good sign of reversing off support.
I’m showing the same days as yesterday with today included on the daily chart. I think things are setting up as anticipated here. As noted yesterday, those first two candles were a good shake out, ramp it up to create weak hands then smack it down to get sellers to sell, all while wholesale is buying their shares up. Again, that third ends in a doji as retail is probably pretty confused what will happen after that shake out.
So, the next series after that, leading to today, was what I was anticipating and why I would have held my ground even if it did open badly. The first day in that series is just retail selling because fear was created in that shake out. That started a chain reaction where retail was running scared in the second and third day, but the rising volume indicates that as wholesale marked it down to freak out retail, they were behind it buying up those shares. Finally today, the buying buy wholesale finally absorbed all the selling by retail.
Thinking back on the micro analysis, all that volume in the first part of the day was wholesale buying up the rest of the fear and the price finally rose as the fear was gone. Then the second half of the day was just testing to see if retail was still selling scared shares, which they weren’t, so it closed green unlike the previous three days where there was still fear in the market driving it down.
Those wholesalers are tricky. They used that support area to first bring in weak hands by moving it up as if it were about to bounce off support, then jacking it down to shake retail out in fear that it was going to break support instead.
Here is the weekly chart. First off, if you look this week, you can almost see the shake out at support. The beginning was what looked like a bounce which created the upper wick, then a sell off which created the lower wick. Finally ending in that last series of days which was mopping up the rest of the sellers and ending the weak pretty much where it started, creating a doji for the week. The difference is that the sellers were taken out and a reversal should now start since that threat was eliminated.
I highlighted those two areas to show some similarities. It looks like the wholesalers pulled a similar move in both areas right there at support. It came down to support pretty hard, had that one green candle in the middle which looked like the bounce, but was brought back down again to shake out more sellers fearing support would be broken.
I’m expecting a strong day Monday. If my analysis is right, the sellers have been absorbed and the move back up to resistance around $4.96 should move pretty quick.
I do want to point out one thing, looking back at the two area in the global analysis. You can see that big green candle week that ends the first highlighted area. I am expecting next week to be a nice green candle also, but not to the degree of that one. The price action in the first area was much more volatile that that of the second are. So, the build up (the cause) leading up to that green bar (the effect) was greater in that first area. This time around the cause is smaller, so I expect the effect to be smaller.
I am also expecting to sell 1/3 of my position next week as we approach that $4.96 area of resistance on strength.