Ichimoku weekly is bullish, with Chikou well above price, featuring Senkou Span “A” on top (green cloud). Kijun-sen is flat suggesting support, while price is below Tenkan-sen. Additionally, we see wicks at the lows of most candles. This week will likely close in a tighter range than the previous week, unless we break higher tomorrow. Last weeks low is a datum point or target if we development more bearish sentiment.
The sluggish price action can be better explained in the daily chart that follows.
For the past 28 days, price action has been imprisoned inside kumo. It’s no wonder we’ve seen lethargic progress. Now, as we approach the edge of the cloud, Thursday lows came close to piercing support. The indecision present in this doji, reminds traders that neither the bulls nor bears have the needed conviction to break through support or resistance…..for now.
Thursday closing prices held at kijun-sen, suggesting its still possible to see a break to the upside. Chikou is currently touching the third candle (doji) just inside kumo on the left side. A push higher would confirm this line as bullish. A drop below price action would change chikou to bearish.
Stochastic is approaching overbought territory, while NYMO closed just below the zero. The McClellan oscillator dipped to (-60) in the previous week. The bullish trend may resume, should breadth improve for another few days.
Given the daily chart above, one could argue the four hour chart suggests price action is on the verge of breaking above kumo. If price breaks higher on this time frame, that would lend credence to daily price action breaking through the cloud in a bullish trend.
However, if price finds resistance at senkou on this chart, as futures currently suggest, that would point to loss of kumo support on the daily.
Considering the above, the next two or three days should give us a better idea how to navigate this trend into the the final two months of 2016.
Sector performance, dollar strength or weakness and bond yields will combine to reinforce our thoughts for yet another October session. Will we chalk up another gain or will October fall victim to election paralysis? We will know soon enough.
Happy Trading – CV
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