6/8/25 Follow-through Buying or Reverse Down?

1. Tuesday’s candlestick (Aug 5) was a big bull bar closing near its high and far above the 20-day EMA.
   
2. In our last report, we said traders would see if the bulls could create a strong bull bar closing above the 20-day EMA, or if the market would trade higher but close with a long tail above and below the middle of its range instead.
   
3. The market formed a strong rally for the day.
   
4. The bulls want any pullback to lack follow-through selling, similar to the last few pullbacks (July 7, July 11, July 15, and July 22). So far, this is the case. There is limited follow-through selling again.
   
5. They see the recent move as a two-legged pullback. They want the 20-day EMA or the bull trend line to act as a support level. So far, this appears to be the case.
   
6. They want a retest of the July 24 high followed by a strong breakout above.
   
7. They want another strong leg up to form the wedge pattern, with the first two legs being Jun 20 and July 24.
   
8. They hope the pullback has alleviated the recent overbought condition.
   
9. They need to create follow-through buying over the next few days to increase the odds of higher prices.
   
10. The bears got a pullback from a large wedge pattern (May 15, Jun 20, and Jul 24) and an embedded wedge (Jul 14, Jul 18, and Jul 24).
    
11. Previously, the bears were unable to create follow-through selling in the last four selloff attempts (July 7, July 11, July 15, and July 22). Seems to be the case again this time.
    
12. They want the market to form a lower high (vs Jul 24) and a double top bear flag (Jul 30 and Aug 5).
    
13. They need to create strong bear bars closing near their lows and trading below the 20-day EMA to show they are back in control.
    
14. Production for August may be flat or down.
    
15. Refineries' appetite to buy looks decent recently.
    
16. Export: August demand remains to be seen.
    
17. The market formed a pullback testing the bull trend line (Aug 4) and formed a higher low.
    
18. Traders will assess the strength of the pullback to determine whether it will be a minor correction or a more significant event. So far, the pullback appears to be minor.
    
19. Traders are wondering if the pullback has alleviated the prior overbought condition.
    
20. Will the market form a retest of the July 24 high and a breakout above? Or will the market form a lower high and a double top bear flag, followed by another leg down instead?
    
21. For tomorrow (Wednesday, Aug 6), traders will see if the bulls can create follow-through buying, even if it is just a bull doji.
    
22. Or will the market reverse down sharply below the 20-day EMA instead? If this is the case, it could mean the bulls are not as strong as they had hoped, and things can become dangerous.
    

Andrew