Now it seems the support reversed the local trend, which allowed the indicators to get into an overbought zone.
Historically This strong horizontal support level (+ high volume node) used to reverse local trends and even served as a main support before the Rally to 19.800. In previous Uptrend it also served as a main support before Rally to 13.800 continued.
We have two main resistances we should watch now -Local Resistance (Previous Support) -121 MA Resistance, which is a main resistance during Downtrend + 61.8% Fib Fan Level
Currently we have a good bullish momentum to break the local resistance, plus we saw the crossover between the 20 MA and the Price Chart. In one of my ideas I mentioned these crossovers historically served as a main signals of local trend reversals. Nevertheless the main resistance, which is 121 MA should not be broken. (to avoid fakeouts use RSI and MFI - main resistances for them: 75 horizontal line for RSI, 70 Resistance Line for MFI)
Is there a chance the Overall trend changed? Nevertheless we should consider all options, the probability of this one is very small. Here is why: - We do not see the confirmation from trading volumes (which show the overall sentiment has not changed) - Zone of 6.600-7.700 is very suspicous to be the bottom for the price. The process does not look like the accumulation at all. This zone was only formed because the price had been stuck between two strong zones (Local Resistance and Strong Horizontal Support). And one more again there is no confirmation from volumes.
It gives us an opportunity to initiate short position. Please read one of my previous ideas where I explained how to work with Overbought zone properly.
Despite of what have been said above you should remember that there is always a chance the overall trend might changes. We should never exclude even this option. Use the main resistances for indicators RSI and MFI which I mentioned above to avoid fakeout. And only in case these resistances are broken, we can consider an option of the overall trend reversal.
Screenshot in addition: The horizontal support performance
Thank You for reading this idea! Hope it is been useful to you and some of you will turn this information into profitable information:)
Please hit the Like button if you like this idea. Also share your own thoughts and analyzes in comments below.
Remember this analysis is not 100% accurate. No single analysis is. To make a decision follow your own thoughts.
Price action is messing around the 50 and 100w SMA. We recetnly popped above the 50W but I don't think it can be sustained. We might be up here a week or 10 days but then ultimately downward.
Anpu
⋅
@This_Guhy, I would agree with you at this point, with one small difference. We can be longer uptrending than 10 days, nevertheless I think it is only the local Uptrend and nothing more :)
This_Guhy
⋅
@Anpu, Here is a low timeframe with the 50w programed to fit. You can see staying above the 50w is hard going.
Anpu
⋅
@This_Guhy, yes it is. This is due the price near the Local resistance (Previous support).
Awesome TA