Pre-market Analysis for 7/18/12

The daily chart shows price yesterday opening just below the daily pivot (though yesterday at this time the chart had shown it opening above the daily pivot - 2nd time I've noticed this in the past week) and making a lower low and higher high. Price found support at the MD and MW MAs during the day and closed near its high. Today price has opened above the daily pivot and has traded down to test the pivot. A MW high is projected for Friday, so any retest of yesterday's lows should find soft support on the weekly pivot or MW MA if we are still on the upside of the MW cycle.

The hourly chart shows price making a 24Hr high in the early hours of Tuesday then a 24Hr low off MD MA support two hours after the NY open. Price rebounded to a higher high but appears to have put in a half-span 24Hr high just before the close. Such shifts usually occur when larger timeframe cycles are turning. If the MW cycle is turning then it is doing so prematurely which has bearish connotations. It is possible that the MD cycle is attempting to turn, as it is in the window to do so, but that it having trouble doing so against the direction of the MW cycle. The next 24Hr low, projected for an hour after the NY open, may help shed more light on the situation. If price finds support for the 24Hr low on the daily pivot (which has acted as support several times overnight), we have likely seen the MD low yesterday and I would expect yesterday's high to be retested by day's end; if the 24Hr low goes beyond projection in time and retests yesterday's lows, we are either still searching for a MD low, or perhaps are just starting the search for a MW low. We are currently in the timeframe to put in a session low, and a session high is projected for a little over an hour into the NY open (roughly the same time as the projected 24Hr low).

Very little clarity from yesterday's trading as the trip down to the blue MD MA made perfect sense but the half-span 24Hr high just hours later tells an entirely different (and bearish) story.  A bounce off the daily pivot shortly after the open and a move above the 5:30am EST candle will be bullish.  A break of the daily pivot and double-bottom of yesterday's low would be less bullish but still fit within the bullish MW cycle scenario.  A substantial break of yesterday's low would indicate to me we are on the downside of the MW cycle and be very bearish.