In the market Monday, we had a very tightly controlled decline that was part of an often used strategy to reverse market sell offs. From the beginning of the day, on a Monday, the market is allowed to sell lower and continue to decline until about halfway through the third 120 minute candle which is where that mysterious force we all know well hits the Index ETFs and the futures like a hurricane and drives them up to convert the third 120 minute candle into a reversal hammer.
By doing this on a Monday, this also changes the weekly candle to a hammer since that day's trading is the only trading for the week and it also changes the daily candle to a reversal hammer as the third 120 minute bar closes. When the fourth 120 minute bar opens at 3:30 pm it actually only lasts thirty minutes and during that last half hour the intraday only shorts cover causing that bar to go green into the close preserving the hammer reversal candle on the week, day, and third 120 minute bar. This is a technique used often through the Bernanke years and has become a fixture during Yellen's reign too. With just thirty minutes of intense buying of the Index ETFs and the futures, anytime between 1:30 and 3:30 pm EST, they can produce triple reversal hammers which the bulls dream about, especially when they happen at a lower channel line which is exactly where it happened Monday.
The week, day, and 120 candles for the S&P are directly to the right of its channel chart and accordingly on the lower Nasdaq chart.
click on image to enlarge
This is it bulls, the friendly force that has been at your back for years now has carefully crafted one of the best setups possible for a multi day bounce. It's not going to happen by itself, the bulls will have to put their money where their mouth is right here and now or they will have missed a golden opportunity to at least back test S&P 2000.
Trade well my friends
Alan
