As I mentioned last time, if we close with a green candle today we'll have a Doji Sandwich, which is very bullish. We also opened with a Doji Gap UP which is also very bullish. Plus we had strong volume today giving the move more credibility. If you're long, that is one beautiful pattern!
Additional good news is stochastics are not yet over 80%, so for my criteria, not overbought.
If you take these factors plus the ones I mentioned in Update 12, there is a good chance price action will go higher than the current target at the yellow range 27.2% Fib extension. Other higher targets I'd consider is the green range 27.2% Fib extension (561, the original target), yellow 61.8% Fib extension (573 1/4), and the green range 61.8% Fib extension (589 1/2).
Before picking one, I want to take a look at past resistance. Here's a longer term chart that shows that:
I can see important resistance around the 573 1/4 yellow 61.8% Fib extension. Price could cut right through it, but we don't know what will happen there and stochastics could be overbought by the time price reaches that level, so it should be respected at this point. So now I'd rule out the green 61.8% Fib at 589 1/2.
The green 27.2% Fib extension is so close to the current target its not even worth the risk of raising the target.
So that leaves us with the yellow 61.8% Fib extension. Its 573 1/4 but I'll reset the new target to 572 to account for the Bid/Ask spread and the occasional market practical joke of missing a likely target by just a few ticks.
I also raised my stop to just over break even at 536. I had entered at 535.
Here's another analysis. See the green angled trend lines from Sep/Oct? They are equal. The one on the right is a copy of the one on the left and moved up so it starts at the swing low. I drew it there to project the possible AB=CD move. As it urns out the price action went higher. I was taught that expansion is usually a Fib extension. Let's find out and use the same expansion percentage for our second yellow angled trend line to get a possible new target.
Left green line = 498 3/4 - 457 3/4 = 41 points (those have been written on the chart). The second green angled trend line = 539 1/4 - 482 3/4 = 56 1/2 points.
which is pretty close to
a Fib 1.272 expansion.
The left yellow angled trend line = 546 - 501 3/4 = 44 1/4 (those have been written on the chart too).
44 1/4 x 1.272 = 56 1/4
Our current swing low is 516 1/4
516 1/4 + 56 1/4 = 572 1/2
What do you know, that's exactly the new target I picked above! I swear I picked the target before I did this trend line expansion symmetry analysis. This is a very nice confirmation.
Of course, anything can happen, and if price hits the first target (557 3/4 or 561) and reverses before hitting my new target (572), it will be very disappointing. But there are so many indications price action will go higher than my conservative current target, it a good trade to increase the target.
One thing that concerns me is we closed over the Bollinger Bands today. But looking through history for this contract I see there have been continued trends after closing over the BB in the past.
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