On the bear side, the accumulation takes the shape of a , indicating a clear entry for a second leg downwards if the 3800 support were to be broken in convincing volumes. Green levels (3700 = 0.618 retrace ; 3500/3400 = 1 to 1 extension of first leg down) are next potential supports along the way down. One should be careful of a fakeout if entering a short. I have a small stop short entry at 3799 with tight stop-loss, and I would enter a bigger short position on sight of a first lower high below 3800. TP1/TP2/TP3 : green supports.
On the bull side, we have an divergence building up on multiple time frames, and the spirit of Christmas who makes miracles. I don't believe in this outcome yet, but "one should always be prepared for all foreseeable scenarios". A convincing break of 4000 level would shift my sentiment to , hence a small stop long entry at 4001 setup. Same train of thought as the case for a bigger long position. TP1 : 4299, then let the winner ride.
- Bullish break : 4001 stop long / 4139 TP1 / SL to be set depending on strength
- Bearish break : 3979 stop short / 3701 TP1 / 3501 TP2 / SL to be set same way
TP2 @3501 is much riskier, since 0.618 bearish retracement is already done. If we add the fact that 3700 support is a strong one in recent price action, we can either close the entire position manually, or let the winner ride with a tight profitable stop for the remainder of the position (my choice).
After that ? Another big bullish move to complete a probable dead cat bounce ?