March 23, 2005: Wedge

After close analysis:

This is day following FOMC, and usually market rallies in either direction 1 or 2 days following such event. Well, today was all about consolidation and again was also about "patterns"! It's very clear on the charts that most if not all indices and futs experienced either triangles or wedges: they're b/o patterns but in this case are considered continuation after yesterday's spike down. Market is weak and bottom pickers must be all over the place. Only thing I see supporting some kind of consolidation or reversal to upside is the pattern on Semis whereby a triangle is forming w/clear dbl. bottom. Another thing I'll be following is the 1160 area on ES which is key. Other than that, I go with what the system says: short.

Observation(s) of the day: yesterday's b/o point in the afternoon was the resistance level for today. It's not the highs and lows - it's all about the b/o's (maybe I should coin that? :P).
I always have all sessions charts up to see where price is closest to emas.

Market breadth was weak for the day with Add and Addq just consolidating at bottom of yesterday's range. Vold didn't make a new low today but was very weak (low @ -500) considering it was a consolidation day.

Futures consolidated all day in a wedge pattern before breaking out of it late in the day. Also all couldn't take out 2 important things: Ema and yesterday's b/o point. This can be seen on NQ and ES200R's chinese great wall. AB same price action with 605 just few points away. ES close to 1160 and will keep a close eye on that area for a possible support and bounce.

Indices tried to rally in the morning but bumped against emas and turned back later in the day. Semis seem to be forming a b/o pattern to either side and will keep watching it. Dow was the weakest of them all and didn't even approach its prior day's b/o point.

Overall positive day!