Down 5-day pattern, with the Weekly timeframe closing on their lows. This price action was not unexpected, as it was mentioned last week. Around the 3-week cycle highs (6647), it is often the case that price will have a reversal weekly timeframe before the trend resumes from a lower Weekly open.
The big difference now for any up-trend to resume is going to be the December 50% level, because technically everything now is pointing to lower prices.
The market is not trading above any support (50% trend indentification), and could easily make lower lows in December. (below November lows)
Basically the 1 week reversal pattern has moved down to far for any major UP trend to continue in 2007, even though this week is contract expiry which often pushes prices higher by Thursday.
By Analyzing the larger timeframes, the market looks like it’s consolidating for the rest of the 2007, closing out December to set up the major Primary levels for 2008.
The weekly channels are important, not only for trend identification using the 50% levels, but also gives traders a market ‘path’ for price to travel towards and swing back from.
Last week it was modeled for price to move towards 6735 and then reverse back down into the 3-day lows. This week the trend guide is going to be 6523 (weekly 50%) with a rotation down towards 6351 and support.
With a lower Weekly open, there is always an expectation that price will swing back towards the central levels and 3-day highs, before resuming the trend. And I think this will be the case with December contract expiry on Thursday.
In conclusion:- looking for a counter-trend up move next week, it’s a lower Weekly open.
My expectation is that markets are consolidating into the end of 2007, and if that is the case, it wouldn’t surprise me to see rotating UP week (closing higher than open), before having another down week after expiry.
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