Fast Move Up Today --> Strong Support of Larger Downtrend
The market decided to do a very strong 180 reversal today. When the main trend is an upward bull market, the typical movement of the price action is a gradual increase on the upward movement while have fast downward movement (corrections) that are larger and occur much quicker. This has been the case of both drops the past two corrections in Jan-Mar 2018 and Oct-Dec 2018. However, these past few weeks, the price movement has shifted to a gradual decline with fast price moves up (corrections). Based on the way prices are now moving in comparison to the price action over the past two years, this is a strong indication that we have shifted into a downtrend in the long run. Keep this in mind as we move forward as the typical movements we have become used to will likely not be how prices move when the general trend has reversed. That said, my previous analysis of heading lower towards $260 or even lower to $210-230 has not changed. Today we broke out of the downward channel and I was a bit surprised by how quickly the reversal to $280 happened but it does not remove the likely possibility of a continued drop unless we break out completely of the current downtrend. As seen by the red circles, we have already bounced against this larger downtrend 6 times before, twice in both circles. I don't believe that this current approach towards this level will be any different and I see a likely two bounce movement before heading back down towards $260. Additionally, the MACD appears to be topping out ready to move back towards a crossover in the coming days while the RSI has increased significantly today.
Taking a look at the 15m chart on the left, I highlight the general movement I'm expecting to happen as we move up to $281.50 area before moving back down around $277.50 around the top of the upper bound of the channel followed by another move to around $281.50. Based on these movements, two rejections to break through $281.50 will set up the chart for a continued move down towards $260 in the coming weeks. The MACD on the 15m chart set up is ready for a small move up with a move down while the RSI is at overbought territory as of today. If a strong break of $281.50 occurs with good buying volume, it will be a chance to reconsider the possibility of a low being established for the time being but I find the chance of this happening very low and expect the price to fall back down to $268 by around June 10th which will be around the lower bound of the channel we broke out of today.
TLDR: We're in a downtrend now, expect a short break in the gradual decline, expecting price to be near $268 around June 10th.
Taking a look at the 15m chart on the left, I highlight the general movement I'm expecting to happen as we move up to $281.50 area before moving back down around $277.50 around the top of the upper bound of the channel followed by another move to around $281.50. Based on these movements, two rejections to break through $281.50 will set up the chart for a continued move down towards $260 in the coming weeks. The MACD on the 15m chart set up is ready for a small move up with a move down while the RSI is at overbought territory as of today. If a strong break of $281.50 occurs with good buying volume, it will be a chance to reconsider the possibility of a low being established for the time being but I find the chance of this happening very low and expect the price to fall back down to $268 by around June 10th which will be around the lower bound of the channel we broke out of today.
TLDR: We're in a downtrend now, expect a short break in the gradual decline, expecting price to be near $268 around June 10th.