Good morning, traders. Price finally moved a bit, dropping overnight and breaking through the bottom of the ascending triangle it was printing before finding support at the S3 pivot on the 15 minute TF. I spoke consistently about how I didn't like that the pattern was full of white space and wicks with small candle bodies creating the small horizontal TR within the pattern as it usually indicates that the pattern isn't strong and that often results in it not playing out as expected. Remember, patterns aren't patterns because they look like it, rather there are rules and guidelines that you have to take into consideration as well. So now that price is back in the July triangle, what should we expect?
Price breached the descending channel's resistance and is currently sitting under the 15 minute pivot which we have tested as resistance. It is printing a TR between $6350 and $6410. OBV fell to the bottom of the descending wedge and bounced off a previous horizontal support/resistance area. Price needs to breach the descending red line and then the pivot for any hope of moving upward at this time. Based on the current local TR structure, if price heads up then I am leaning toward the possibility of a Spring down to the S1 pivot before it does so.
On the 4H chart, we can see another local, albeit a bit larger, TR that price has been trading within since 10/15 that's denoted in blue. Price is sitting on the bottom of it with the July triangle's resistance keeping it from pushing higher at this time. However, we can see a descending broadening wedge printing at that triangle resistance and price appearing to be pushing against it. Traders should notice that the largest black candle shows absorption (long lower wick) as does the next candle. The third candle is a doji and the fourth finally shows some some sell-side strength only to be negated by the following green candle. Finally, the current candle is, again, showing demand so far as witnessed by the long lower wick. As we know, this smaller TR is within the larger TR that has been printing since 9/8 which is denoted in black. If this larger TR continues to play out, then price is currently printing the LPS which is indicative of a further move up and that's shown by the red outline of possible movement. Currently, shorts are sitting at 34,500 and the shorts/longs ratio has increased to 1.6923. With volume as low as it is, if price does move up it is likely to be quite explosive (potential short squeeze) and we may see it fly without the consolidation above the top of the larger TR. The 4H OBV has remained flat throughout the smaller, blue TR, and sits above support. MACD remains bullish and is curled up. If price falls through this blue TR, then I will be looking for initial support at the 4H pivot and, upon a breach of that, will be watching the $6254 area.
None of this means that price must necessarily go up, as I continue to warn traders. Trading is nothing more than speculation, which means the only thing you control is how much you lose thereby making risk management the single most important aspect of trading. It is also the one that retail traders rarely give much thought to. However, the current set up does paint a heck of a narrative. For me, I continue to not be interested in entering a trade until price moves out of the larger black TR. This doesn't mean I will immediately go long on a breach of resistance or short on a breach of support. It means that I will evaluate volume and price action at the time that the breach occurs and decide, then, if I am going to possibly long or short a trade. A drop below support may indicate that a terminal shakeout is occurring, or is about to occur. As such, going short at that time, for instance, would be highly risky with most exchanges often showing an inability to fill orders, take profits, or stop losses due to the fast movement of price.
Remember, you can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own.
Price breached the descending channel's resistance and is currently sitting under the 15 minute pivot which we have tested as resistance. It is printing a TR between $6350 and $6410. OBV fell to the bottom of the descending wedge and bounced off a previous horizontal support/resistance area. Price needs to breach the descending red line and then the pivot for any hope of moving upward at this time. Based on the current local TR structure, if price heads up then I am leaning toward the possibility of a Spring down to the S1 pivot before it does so.
On the 4H chart, we can see another local, albeit a bit larger, TR that price has been trading within since 10/15 that's denoted in blue. Price is sitting on the bottom of it with the July triangle's resistance keeping it from pushing higher at this time. However, we can see a descending broadening wedge printing at that triangle resistance and price appearing to be pushing against it. Traders should notice that the largest black candle shows absorption (long lower wick) as does the next candle. The third candle is a doji and the fourth finally shows some some sell-side strength only to be negated by the following green candle. Finally, the current candle is, again, showing demand so far as witnessed by the long lower wick. As we know, this smaller TR is within the larger TR that has been printing since 9/8 which is denoted in black. If this larger TR continues to play out, then price is currently printing the LPS which is indicative of a further move up and that's shown by the red outline of possible movement. Currently, shorts are sitting at 34,500 and the shorts/longs ratio has increased to 1.6923. With volume as low as it is, if price does move up it is likely to be quite explosive (potential short squeeze) and we may see it fly without the consolidation above the top of the larger TR. The 4H OBV has remained flat throughout the smaller, blue TR, and sits above support. MACD remains bullish and is curled up. If price falls through this blue TR, then I will be looking for initial support at the 4H pivot and, upon a breach of that, will be watching the $6254 area.
None of this means that price must necessarily go up, as I continue to warn traders. Trading is nothing more than speculation, which means the only thing you control is how much you lose thereby making risk management the single most important aspect of trading. It is also the one that retail traders rarely give much thought to. However, the current set up does paint a heck of a narrative. For me, I continue to not be interested in entering a trade until price moves out of the larger black TR. This doesn't mean I will immediately go long on a breach of resistance or short on a breach of support. It means that I will evaluate volume and price action at the time that the breach occurs and decide, then, if I am going to possibly long or short a trade. A drop below support may indicate that a terminal shakeout is occurring, or is about to occur. As such, going short at that time, for instance, would be highly risky with most exchanges often showing an inability to fill orders, take profits, or stop losses due to the fast movement of price.
Remember, you can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own.