We can see a shift in the market direction by the series of lower highs we can see on the chart (this can be seen be the use of the yellow circles) the market is now forming lower highs so it is safe to say that we can expect the market to continue in this fashion by forming another lower high and then continuing with the short term trend by forming a lower low.
The reason for my short idea can be broken down into a few key points:
1. Recent change in market direct (market is trending downwards we can see this because the market is forming lower highs and lower lows)
2. The market has pulled back into a key Fibonacci level (78.2% fib level) at $6635 which also confluences with an area of support now turned resistance (we are retesting this level as resistance now)
3. We have recently broken the ascending trend line and are now retesting this as resistance.
4. The market is consolidating around this area and we can see a number of wick rejections of this upper level.
I have put my stop loss just above the highest wick rejection at around $6671 as i know if the market rises above this level my trade will be invalidated and i no longer want to be in the short position.
The reason for my short idea can be broken down into a few key points:
1. Recent change in market direct (market is trending downwards we can see this because the market is forming lower highs and lower lows)
2. The market has pulled back into a key Fibonacci level (78.2% fib level) at $6635 which also confluences with an area of support now turned resistance (we are retesting this level as resistance now)
3. We have recently broken the ascending trend line and are now retesting this as resistance.
4. The market is consolidating around this area and we can see a number of wick rejections of this upper level.
I have put my stop loss just above the highest wick rejection at around $6671 as i know if the market rises above this level my trade will be invalidated and i no longer want to be in the short position.