"TREND TRADE, trade within TRADING RANGES, and also anticipates REVERSALS. The signals are 1B, 2B and 3B candlesticks patterns- signalling REJECTIONS @ KEY HOT ZONES. PRICE/MACD DIVERGENCE is a key part of the strategy. But don’t always wait for it. " Trend begets Trading Range, and Trading Range begets Trends.
2. Clearly, we see there was an uptrend that got broken convincingly, following the Buy climax @ 1.5555. From here, The selling seized= The BOL. The first leg up of the trading range tested the BX, and produced a Higher High major Trend reversal. This sold heavily , but that was expected to halt around the BOL zones = The 2nd leg down. A buy zone is clearly defined here.
3. PRICE/MACD show bullish divergence= long
4. We have a 2B candlestick pattern here= a doji+a bull trend bar for confimation. I would long @ mkt open with stop slightly below the pattern.
The context is right for long, and so, should the trade fail by this signal, I would look for the next signal to go long in this zone again.
I'm envisaging this leg producing a double top w/ BX = The right shoulder for a potential HEAD & SHOULDER