ATM Trading Club Newsletter

Monday, May 27, 2024

After the Long Memorial Weekend, What to Expect for the Coming Week in This Market?

As we look ahead to the coming week, a notable development on the daily timeframe is the formation of a bullish harami pattern. This chart pattern indicates a potential shift from a downtrend to an uptrend.

A bullish harami consists of two candlesticks:

1. Long Bearish Candle: The first candle is long and bearish, signifying strong selling pressure.

2. Smaller Bullish Candle: The second candle is smaller and bullish (green), and it lies within the range of the first candle.

The alignment of these candles suggests that sellers are losing control to buyers, signaling a potential reversal in the market sentiment. As we move forward, this pattern indicates a possible bullish outlook for the week, provided other market conditions and indicators align with this reversal signal.

Keep an eye on how the market reacts to this pattern and whether it confirms the potential uptrend in the coming days.

Levels for the week….

MA(5) 5301.82

EMA(9) 5281.12

On the 5-minute chart, we have identified a potential inverse head and shoulders pattern, with the neckline situated at 5310. This pattern is typically a bullish reversal signal, suggesting that if the price breaks above the neckline, it could indicate a move higher. Keep a close watch on this level as a breakout above it could confirm the reversal and lead to a significant upward momentum.

Plays to Consider for Tuesday, May 28, 2024:

PUT VERTICAL

- A test of 5295/5300:

- Aggressive trade: 5295/5290

- Conservative trade: 5285/5280

CALL VERTICAL

- A failure once again of 5315:

- Aggressive trade: 5320/5325

- Conservative trade: 5335/5340

Additional Strategy:

- At the open, consider a Put if price tests 5310 with a gap up and play the gap fill with a Put.

- The flip would be once the gap fills, then play a Call to re-test the 5310.

Note: If playing the Calls and Puts strategies, it is encouraged to use ITM (In-The-Money) calls and puts for better value and profit.

Educational Candlestick Section: Bullish Harami

A bullish harami is a candlestick chart pattern that indicates a potential change from a downtrend to an uptrend. It consists of two candlesticks:

- Long Bearish Candle: The first candle is long and bearish.

- Smaller Bullish (Green) Candle: The second candle is smaller and bullish, forming within the range of the first candle.

The alignment of these candles suggests that sellers are losing control to buyers. Some investors may view a bullish harami as a signal to enter a long position on an asset. However, it's best to consider the bullish harami in conjunction with other factors to confirm its validity. Prudent traders often look for subsequent upward price movement after the pattern to validate it as a credible indication.

The market context in which the bullish harami is developing is more important than the length of the candles' bodies or shadows. Understanding the broader market conditions can provide better insights and help confirm the pattern's reliability.