Another strong bullish week has passed, taking out the most important LHBL (Last High Before Low) of the Monthly correction since last September. Taking out the Monthly High at 8672.5 signaled a bullish reversal up on the Monthly timeframe.
As mentioned on the last review, there are good chances that we are in an AB=CD pattern on the Daily timeframe, aiming towards 8900 area as its target. The market has given another justification for it on the Daily timeframe as the Daily bullish engulfing made on last Wednesday – on sloping 8 EMA, followed by a thrust up – is a signal to reach target of the same amplitude, i.e. 8907.
Here we have a dilemma.
On one hand, we are very close to the bullish trigger entry (the High of last Wednesday at 8722.4), so any pullback to that level as the market did on last Thursday and Friday – can be an opportunity to join this move (Stop below last Wednesday’s Low at 8537.8).
On the other hand, since the market has been in a Monthly bearish territory closing twice the Monthly bars below the 8 EMA short term sentiment line, a cautious joining the current move is needed, as long as there is not any considerable pullback to test the Monthly Low, meaning that the above Daily signal has less chances than the typical probability.
I would say: if there is a doubt, then there is no doubt.
Taking out the Monthly swing High at 8968.7 (September 2016) is a bullish signal to reach the area of 10043.
Disclaimer: Anyone who takes action by this article does it at his own risk, and the writer won’t have any liability for any damages caused by this action.