The XJO closed higher on Friday, and popped its head back over the potential resistance line @5903.2.
Although the narrower spread suggests that there is still potential difficulties above that line.
Volume (value traded) was much increased over Thursday which stems from the Individual Equity Expiry day, so volume offers no great help in the analysis on Friday.
Although there was an attempt to reverse, it would not be considered a particularly bullish reversal until the high of the initial bar is exceeded (5973.3), which can take place over a couple of bars if nessesary. However as it stands there is a ~50% chance price will move lower on Monday and again challenge the sellers to take the upper hand, and a ~50% chance it will continue higher, perhaps to complete the reversal.
(Now for something a little different) XJO - Monday to Friday-Five Day Chart - Bar by Bar Analysis
- Bar 0 shows the Index Breaking out through the previous highs of 5679.5, with a wide spread and high close that clearly shows 'ease of movement' to the upside. This bar is potentially strong and should carry with it, decent momentum in the market. - Bar 1 then initially pulls back, which will challenge any sellers to take their opportunity, however the sellers failed to respond, so price then moves upward to close high, although the spread of the bar is much reduced compared to Bar 0. Now look at the high of bar 1 and its close, and compare them to the high and close of Bar 0. Over that full week not much more ground to the upside was made, which suggests that there has been supply waiting overhead, which restriced the upside movement. - Bar 2 then initially moves higher and it beaten down over the week to close poorly, and again the weekly spread has reduced. In an uptrend, and without any obvious selling pressure immeadiately behind this type of bar, I always consider the chance this bar represents absorption of supply (at the resistance level), however in a downtrend or if confirmed selling has taken place prior, this bar would most likely be very weak, infering ongoing selling pressure. The next bar will likely give a good hint at Bar 2's intention. - Bar 3 closes higher, but once again spread has narrowed, which is an obvious sign that supply is still present, & that movement higher continues to be difficult. However the fact that it is up compared to Bar 2, suggests that Bar 2 was in fact an attempt to absorb supply (and if Bar 3 was a down bar, it would have suggested that Bar 2 was more sinister). - Bar 4 has a wider spread, but again closes poorly. The wider spread infers that a large & strong effort was put in to break above and through the resistance that has been thwarting upward progress. The poor close on Bar 4 suggests that the supply (resistance) continues to hold the upper hand. And although this bar was also a type of potential absorption bar similar to Bar 2, it is becoming obvious that the sellers at resistance remain strong and continue to hold the upper hand. - Bar 5 is a change, in response to the potential failure of Bar 4 to bust through the resistance, it is a pullback or shakeout in price, sort of like a challenge to any sellers (who are causing the resistance) to sell all they have before price falls too far away from them. And the mid bar close on Bar 5 also shows that there was some buying off of the five day lows, possibly only speculative buying. - Bar 6 initially pulls back to challenge any sellers to come forward, which they don't. Then (almost like it has taken a run up) price accelerates upward to slice through the resistance and close high. The thought here is that the initial push above resistance (that failed) would have weakened the resistance somewhat, then the sharp pullback should have encouraged any remaining supply to come forward, potentially leaving a supply vacuum (a temporary severe lack of selling pressure, as all supply present has been bought or absorbed at that level), which allowed price to quickly move higher with ease. -Bar 7 has possibly met supply again, as it did make a higher high than Bar 6, but was not able to maintain those highs. However the close is positioned off the lows, and remains above the resistance line. So in a similar fashion to Bar 2 a strong up bar next would suggest the resistance may have been overcome, or almost overcome, and if a down bar, or a bar that closes poorly comes next, would infer that the resistance potentially continues to remain in place.
(20min delay)