7/25/12 - bounce day out of a multi-day low

The daily chart shows price yesterday opening below the daily pivot and making a lower high and lower low and finding support on the on the monthly pivot. Today price has opened below the daily pivot and made a lower low, again finding soft support on the monthly pivot and MM MA before bouncing above the daily pivot. A multi-week low is projected for Friday or Sunday evening; it is likely that we are seeing merely a bounce out of a MD cycle low, but it is also possible that the higher timeframe support has again turned the MW cycle ahead of projection as it did the prior MW low. We will need to see how price reacts in the area of the MD and MW MAs to know for sure where we are in the MW cycle, but one must assume we are on the downside of it until evidence suggests otherwise.

The hourly chart shows price yesterday finding making a 24Hr high under daily pivot resistance and trading down the remainder of the day until finding its 24Hr low just after the close on monthly pivot support. Price has rallied overnight off of that support and has traded above the 24Hr MA and daily pivot, indicating that yesterday was a MD low. A 24Hr high is projected for near the open and we are also in the window to see a MDH made; it is not unusual to see 24Hr highs extend past projection when coming out of a MDL, however, and I would expect to see price test higher timeframe resistance in the MD and MW MAs before finding its MD high. We are currently overdue to see a session cycle low.

A sell-off around the open to put in a session low (around the brown session MA or daily pivot) should provide a strong buying opportunity for another run up.  I do not expect a 24Hr high to be found until we test the green MW MA above, so buying on the open provides about 3 1/2 points of risk for a potential 10 points of reward, but obviously a sell-off to what I expect to be firm support will make that risk-reward scenario even more appealing.