Since the drop off the top of value in late February, Bears have been in control. But after two months in command, these dominant players have failed to make a sustained separation below the critical high usage ledge of 1640-1620, and I smell trapped money. For May, this translates into a low risk buy at the bottom of value in anticipation of rotation back toward the developing mode of 1680 or the interim top of value toward 1700. Accumulating a long position seems like a solid strategy for May as pockets of low usage above the market offer only small obstacles of resistance to overcome for the Bulls. It would take a break back below the significant high usage ledge of 1620 to call off our bias and put the market back on track for a test toward the 1580-1550 longer-term bottom of value.
The charts included in this report are Price Usage charts which depict the usage of a given price over time. The vertical left axis represents price, while the horizontal axis represents time. Price Usage charts display where the market has ‘used’ price, thus accepting - or rejecting - value. The result of this market auction process are Bell Curve shaped composite Profiles, which indicate phases of development and create a top and bottom of perceived value in the market.
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