Support 1 and Support 2 have failed, and we have a false breakout of the primary trend. As I have stated in the past, if those levels did not hold, which they have not, we would be in a state of limbo, and I believe that is the best way to describe current price action. I know some believe we are setting up for a fractal inverse head and shoulders (one within another), as shown on the chart, but that is pure speculation at this point. However, it's worth noting that a potential right shoulder, if formed, could be at either .5 (7121) or .618 (6796) fib retracement levels of the total move from June low to July high (which is more or less where I drew the potential right shoulder on the chart)
Regardless, I believe more time needs to pass, and more information (more bars) need to develop before things get exciting again. Ideally, for bulls, we want to see the Primary Trend Resistance break to the upside, and hold above. From there, Support 1 and Support 2, which are now technically resistance levels, would be our upside targets (assuming the break isn't so large that it surpasses either level in a single move).
TLDR: Neutral outlook for now
Regardless, I believe more time needs to pass, and more information (more bars) need to develop before things get exciting again. Ideally, for bulls, we want to see the Primary Trend Resistance break to the upside, and hold above. From there, Support 1 and Support 2, which are now technically resistance levels, would be our upside targets (assuming the break isn't so large that it surpasses either level in a single move).
TLDR: Neutral outlook for now
Comment:
Hanging in there for now. This may be a right shoulder, impossible to know right now. Main concern at this point would be if we start to trade below pink left shoulder around 7000 (assuming this is a true inverse HnS pattern).
Comment:
I should have clarified my reasoning behind why trading below that hypothetical left shoulder (around 7000) would concern me.
In my experience I have found the following:
1. In a leading inverse HnS pattern (upward sloping neckline), if the right shoulder forms lower than the left, the pattern has a higher chance of failing.
In my experience I have found the following:
1. In a leading inverse HnS pattern (upward sloping neckline), if the right shoulder forms lower than the left, the pattern has a higher chance of failing.