Long Bullish Candle Breaks the 10-Day MA; Major Retracement Confirmed

2007/12/5 15:20:16

Today should have called for red text, but to keep everyone calm, green text is better. After all, this ID has repeatedly emphasized that after the major retracement that's about to come, there's still at least a bottom-retesting process. So staying calm is essential.

However, now that this retracement has just been confirmed, let's first discuss the retracement itself. Yesterday I clearly stated: "The final confirmation of a major retracement rally will be marked by firmly holding the 10-day MA." Today, in the first 30 minutes of trading, the 10-day MA was conquered, and everything that followed was just a natural continuation.

From this breakout above the descending channel's upper rail, to the pullback confirmation, then to the 10-day MA breakout for final confirmation — all of this was extremely textbook. This kind of situation will be encountered repeatedly in the future. Getting it right this one time isn't enough — you need to understand why, so that when similar situations arise in the future, you'll know how to handle them without this ID needing to waste more words.

Tomorrow, the key level is 5010 — this is the neckline of this small double bottom. As long as this level holds, there's potential to attack toward the basic measured move of the double bottom pattern.

From the perspective of hub oscillation, when this ID previously said the area below 5000 was a bear trap that would ultimately form a larger-level hub oscillation — that actually couldn't be confirmed as fact until the index reclaimed 5032. Today, it finally became fact. What follows is watching how this large-level hub oscillates.

From a gap perspective, the downward gap on the daily chart from November 21-22 must be filled first. If even this can't be accomplished, the retracement force is simply too weak.

From the most optimistic perspective, if this retracement can first reach 5462 and then pull back to confirm, it would form a small head-and-shoulders bottom pattern — that would be the most powerful trajectory. Whether it plays out this way, of course, requires cooperation from multiple fronts.

In summary, once the retracement is established, just follow the unfolding moves — there's no need to box yourself into a particular scenario beforehand. The best approach is still to view things from a hub oscillation perspective, except this time the level is relatively large — 30-minute — so as long as the sub-level 5-minute upward divergence occurs, you can exit and observe. If the pullback still maintains the hub oscillation, then re-enter. (Of course, if you're exceptionally nimble, you can follow the 1-minute chart.)

Naturally, if you can't read the charts, just watch the 5-day MA — as long as the 5-day MA isn't broken, the market maintains its retracement potential.

Need to make a trip to that wretched eunuch village — traffic is terrible — must leave immediately. Signing off first. See you later.