Last week’s ‘model of expectation’ was:- a push down on Monday, and ‘hook’ day on Tuesday, and then a continuation into higher prices on Friday.
After Wednesday’s down day and failure from the 5-day 50% level, I didn’t think the higher close on Friday was going to come about, but this was simply verified by the break of the 3-day cycle high and trending UP day.
There was a forewarning of higher prices with the forward ‘Weekly Rises’, and also the week of contract expiry, which often pushes prices higher into the Weekly close.
Last Week’s expectation was that after the UP week, the following week has a much greater potential of heading down. This is still my view , however it needs to be verified with both the Weekly and December 50% levels.
3-day change of cycle:- Expectation of a reversal back into the previous break before the trend continues. This normally happens over 1-2 days.
A change of cycle can stop at the break @ 13385, and then continue higher the next day, or it can easily continue back down over two days back into the 3-day lows @ 13229.
The same applies to trading the E-mini :- expectation of a reversal back down.
Technically:- both markets are now bullish, they are trading above higher timeframe 50% levels, and whilst price is above those levels, the trend remains up, and it can continue up into the end of the year.
However:- Forward modelling favours a rotation down, because of two repeating patterns….
1. Higher Weekly close and expectation of a 2-day reversal before the trend continues upward.
2. a change of 3-day cycle, and expectation price will rotate back into the previous break, and or the 3-day lows.
If either of these two patterns play out, price will be back under the higher timeframe 50% level, and will have more of a chance to move down next week, than head upwards.
The close of the last day of the year will be important, because it sets up the Primary Trends for 2008.
And statistical, years ending in ‘8’ have never experience down-trending years....
