We are almost at a critical point where we need to decide whether we are going to clear the green or red CME gaps first.
On the bullish flip side we have the pink dashed ascending triangle; as well as a breakout of the blue down trend channel complete with retrace confirming support. This has a target of the top purple long term downtrend channel.
On the bearish side; we have the dotted green descending wedge as well as what some will call a potential head and shoulders pattern forming which will clear the green gap first.
So which will it be? Well head and shoulders are usually formed at the top of an uptrend and are a trend reversal pattern. Considering we have been in a down trend, the head and shoulders pattern is not actually a valid pattern. So we can cross that out, leaving only the newly forming descending wedge pattern. Given we have the longer term down trend channel break out with retrace confirming support + the pink ascending triangle - I am still bullish and looking to close the red gap and retest the top before a move downwards.
On the bullish flip side we have the pink dashed ascending triangle; as well as a breakout of the blue down trend channel complete with retrace confirming support. This has a target of the top purple long term downtrend channel.
On the bearish side; we have the dotted green descending wedge as well as what some will call a potential head and shoulders pattern forming which will clear the green gap first.
So which will it be? Well head and shoulders are usually formed at the top of an uptrend and are a trend reversal pattern. Considering we have been in a down trend, the head and shoulders pattern is not actually a valid pattern. So we can cross that out, leaving only the newly forming descending wedge pattern. Given we have the longer term down trend channel break out with retrace confirming support + the pink ascending triangle - I am still bullish and looking to close the red gap and retest the top before a move downwards.
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And up it is. Clean break out of the potential descending wedge to support a bullish outlook. Looking for a potential retest as highlighted to add to longs around 7975-7990 levels.
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Retest of dotted green descending broadening wedge complete. We sank a bit lower and have bounced off the one hour 55 EMA. Looking to start our journey up from here.
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Inverse head and shoulders (debatable) and ascending triangle in yellow support a move up:
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Getting close to a breakout:
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Note: We could still wick down as low as this trend line:
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As expected we wicked down. We have now broken out of the smaller yellow ascending triangle withing the larger pink ascending triangle. We have just retested the top of the pattern as support. Therefore the Yellow ascending triangle target is 8450, and the larger pink ascending triangle target is 8750. Overall - expecting a potential touch of the purple long term resistance line around 8900 in the next week.
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Another possibility to look out for. Another wick down to the 55 EMA could create the head of a head and shoulders pattern. Given we are in a small uptrend, the pattern would be valid. If it plays out we could see another test of the pink uptrend line of the symmetrical triangle pattern.
I feel this is unlikely, but definitely possible. If it does occur it has the potential to take us down for a second retest of the dotted green support. Have sold some of my position in profit; and placed more buy orders at 8040-8070 waiting for the potential wick. I will sell again at the peak of the second shoulder if it looks like playing out and re-buy at the green dotted support.
I feel this is unlikely, but definitely possible. If it does occur it has the potential to take us down for a second retest of the dotted green support. Have sold some of my position in profit; and placed more buy orders at 8040-8070 waiting for the potential wick. I will sell again at the peak of the second shoulder if it looks like playing out and re-buy at the green dotted support.
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One final note for the moment. I would ignore the possible head and shoulders. A wick down to create the head would be nice, however it must occur soon if it is going to. We have a convergance of support coming up within 10 hours which should give us our lift up to the purple trend line above, if not through it to clear our CME gap and find support before our retest of the top:
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The convergence of support is yellow uptrend, top of ascending triangle/pink mid-term ascending triangle, 55 EMA - this is enough for the boost we need to get close to clearing the red CME gap.
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Re-test complete, if not long now then long!
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Green Bull flag
