What's next? In my opinion and based on all relative trend-lines involved, it is the $13900 Top made in June 2019!
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** Former Resistance turned into Support? **
First of all I will start with the obvious big news made yesterday. After marginally breaking $12000, the price quickly pulled back as most traders who have been (rightly so) accumulating during June/ July, booked their profit. The pull-back stopped exactly on the former 11 month Resistance of $10500. Will it turn into a Support now? If yes, that would be incredibly positive moving forward. So far we see some buying activity, although the price has been mostly consolidating after the initial sharp buying at 10500.
** The dominant pattern **
As seen on the chart, if we ignore the noise of the sharp COVID collapse on March, the pattern that stands out is a Channel Up since late November 2019. It is obvious that the Channel's median is playing a much important role that its top/ bottom (HH, HL trend-lines) as it has registered (including yesterday) 8 cluster touches, much more than the Higher High/ Higher Low trend-lines. Out of the last 7 times, 5 delivered a pull-back.
** Outsider **
Even though the Channel Up is the dominant pattern, I need to mention the role of the Lower High trend-line starting from the June 2019 $13900 High. Since May 2020, it has supported the price action with numerous touches up until the break-out started on July 21. So even if the Channel Up breaks to the downside, we can see this trend-line coming in for a last-resort Support.
** So what's the next Target **
As already mentioned, it is the $13900 Top. In fact at the moment, it makes for a perfect technical Higher High for the Channel Up, even though it is more possible to see another monthly consolidation/ accumulation phase before testing this Resistance, if the trading interest in August is low.
So wouldn't you agree with the ~14k target? Feel free to share your work and let me know in the comments section!
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The logic I'm using here is that because we have not yet seen the 11,975 level broken through with a solid close that gets confirmed above that level, our potential 1st goal for a gain when entering a swing trade right now is at that 11,975 level, but the risk of dropping back to the first level of support is also very real, and in that case the risk (1,900) to reward (975) setup is very poor, so if that closest level of support gives way then you'd better have a tight stop loss in place. Therefoe placing a swing trade right now is risky IMHO. This is why I feel it's important to establish the resistance levels with the closing prices which are much solider an indicator.
This does not matter much for accumulation purposes if one is going to hold it longer term and take the slow ride up. Now could be a reasonable time to do that. If we drop through the closest level of support it will down into 9'ish range it will be an excellent time to do that!