Tuesday, June 30, 2015

EDZ5; ‘Long Legged Doji’ May Mark Important Top

More than simply jumping higher on open yesterday, EDZ5 gapped higher, rallied to a new contract high and finished unchanged from opening level, but 4 bps higher from the previous close. There is a lot going on there and much of the message is conflicting as regards the nature of trend and the prospects for future price action.

The gap higher created a window which would be closed on settlement at or below Friday’s opening level of 99.44. Until such time, 99.44 is considered a support level. The higher close is a bullish break out, but the inability to hold the advance (as well as the decline) from the opening level, suggests a high level of indecision and confusion. Both bullish and bearish contingencies were unable to assert their influence, despite a relatively wide price range.

I believe it somewhat telling that the open/close level of 99.465 yesterday matched the three consecutive session highs of May 13, 14 and 17 that marked an important top, from which EDZ5 fell 13 bps to a low of 99.335 two and a half weeks later.

Currently EDZ5 trades to 99.455 or 1 bp lower. A settle here or lower would provide further clues that the ‘doji’ seen on Monday was a topping pattern that may in time be seen as ‘THE’ important top. 

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