patterns alone can appear anywhere and often do not offer any special information about the going on inside the order flow that shapes the candle by the time it closes. It is the location that makes the formation more actionable and in this case we are at such a location. As I wrote about in my previous report, the 9208 level is the previous swing low, it is slightly below the 9604 level which was a minor .382 support. As long as price stays above this general area, it is indicating strength.
By staying above 9208, the market is maintaining a broader higher low formation and is consolidating on a larger degree. This can even be considered a larger Wave 2 formation if it does not fall apart. The 10288 level is the minor .382 of the recent swing and IF price can close above it, that would be a confirmation that the next swing is more likely in progress.
Keep in mind, what I just wrote is one scenario out of many. Another scenario is price can continue to sell further into the reversal zone which is contained by the 8659 support boundary. This is often where traders get faked into selling longs or worse, sucked into a short position. Can it break lower and keep going, sure, but I believe that to be a less likely scenario because of the overall bias in this market.
In summary, managing a position or timing a swing trade using a chart is about recognizing the meaning of a chart or pattern in relation to the context of the environment it is appearing within. Price at the moment is still in an area where there is a higher probability that a reversal unfolds. Knowing exactly what that looks like, or know exactly when to take action is a function of experience. Just because I describe a scenario does not mean it will happen, it describes what I want the market to show me if I am to do anything further with the position that I have. I define my own rules that determine how I make decisions, and then I let the market prove itself, or not. By doing this, I am letting the market lead, I am not forcing my own ideas upon it. Opportunities often materialize during the less exciting market environments where the herd gets bored and loses interest.
Questions and comments welcome.