18/11/25 No Breakout from Sideways Tight Trading Range Yet
Monday’s candlestick (Nov 17) was an outside bull bar closing in its upper half with a prominent tail above.
In our previous report, we said traders would watch whether the market continues to chop sideways within the tight trading range formed in the last 9 trading days, or if the market would break from either direction. Expect breakouts from trading ranges to fail 80-90% of the time.
The market remains in the tight trading range, testing its upper third.
The bulls hope the current decline will form a major higher low.
If the market trades lower, they want the recent sideways consolidation to be the final flag of the move.
They want a pullback to the 20-day EMA.
The problem with the bull's case is that they haven't been able to create strong bull bars to show control.
They must now produce strong consecutive bull bars, clearly breaking above the tight trading range with follow-through buying.
The bears’ measured-move target, based on the height of the prior trading range, projects toward the 4000–3950 area.
The selloff formed a tight bear channel, showing strong bears and persistent selling pressure.
They see the current tight trading range as a pullback. They want a breakout below, followed by another strong leg down.
If the market trades higher, the bears want it to stall around 4200 or the 20-day EMA, then resume its decline.
Fundamentals
• Production: SPPOMA about flat in the first 15 days.
• Refineries: Buying interest remains, though not paying premiums vs spot futures.
• Exports: ITS said exports are down 15.50% in the first 15 days.
Overall, the market sold off in a tight bear channel — evidence of strong selling momentum.
The market remains Always-In-Short.
The selloff, however, is slightly climactic and has a parabolic wedge shape. The market may need to form a minor pullback before resuming its decline.
However, the bulls have not yet been able to create decent buying pressure.
The bulls need to do more to show they are at least temporarily back in control by creating consecutive strong bull bars. Otherwise, traders will not be willing to buy aggressively.
If the pullback remains sideways and the bulls fail to create strong bull bars, the odds of another leg down towards 4000 will increase in the days/weeks ahead.
For now, odds still slightly favor the first pullback being minor.
Today (Tuesday, Nov 18), traders will watch whether the market continues to chop sideways within the tight trading range formed in the last 10 trading days.
Or if the market breaks from either direction. Expect breakouts from trading ranges to fail 80-90% of the time.
Andrew
