Short-term traders may view the current setup as bearish because the market is currently trading on the weak side of the pivot. This pressure is likely coming from bearish traders defending against an upside breakout over the 50-day moving average at $4875.52.
With the short-term outlook defined and potential exits identified, the focus now shifts to the longer-term viewpoint. It’s saying that a sustained move under $4744.34 opens the door to further downside action with the minor bottom at $4644.46. Not only is it controlling the minor trend, but it’s also a potential trigger point for an acceleration to the downside.
If prices do accelerate lower, the target for the shorts will be the near-term retracement zone at $4495.33 to $4401.84. This is the value zone that if tested is likely to attract the larger buyers. This is because the market is in an uptrend as defined by the 200-day moving average at $4239.25. As long as this long-term indicator holds as support the bias will remain to the upside, meaning that the market will remain in buy the dip territory.
The trade near $4744.34 is telling me the market is asking us to decide, do we want to buy strength on a move over this level, or do we want to wait for a pullback into the value zone at $4495.33 to $4401.84, where we have better control over the risk?
