The idea on Monday 24 June was to wait for a pullback into the rising 8 and 21-day EMA range which would be a range for short term traders to re-accumulate on the buy/long side. We saw the index trade into this range by Thursday (27 July) which was followed by a rebound, a consolidation and then another rebound to trade and close near all-time highs. Traders are always encourage to use multi-day advances to sell into strength. At the current level, the index trades at/around a horizontal resistance level that has been tested on four (4) previous occasions. When one accounts for the long upper wicks, this range is from 73971 to 74346. The long upper wicks represent distribution i.e. selling when the market reaches this range. While we could see the market consolidate or pull back slightly at current levels, it should not surprise traders if a new phase of upward momentum re-emerges. Zooming out, the broader structure notes the development of a cup and handle technical formation.
Lester Davids
Analyst: Unum Capital
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