Weekly Chart Update
With the current momentum and current position in mind.. I have speculated 3 scenarios which may occur. Scenario 1 or 2 being likely and Scenario 3 being unlikely.
Hope you find it helpful and gets you thinking to prepare your buy/sell/hold tactics for whats coming
In scenario 1: Friday's close suggests it will have a direct go at 5.2 on Monday morning. Monday's candle spread and close is significant to determine which of the 3 scenarios are more likely to play out
If it manages to clear 5.2 I'm expecting to be slapped back around the mid 6s or within the green box due to some of the overheads from last year in the area along with profit takers and ontop of that no strong consolidation period prior to breakout to shake them out. The success rate of scenario 1 is highly reliant on high volume.
In scenario 2 :
Possible if it can't close over 5.2 and later end up closing lower than Friday's close
A healthy consolidation forms a bull flag /pennant followed big a breakout. There will be alot more flare in the push towards the mid 6s therefore may need less time to clean up the profittakers. This scenario is more beneficial for the trend traders will be frustrated or be spooked out to wait on the sidelines. Although a healthier soloution, it also carries the risk if the flag/pennant breaks downwards which suggests that the pros were exploiting the opportunity to distribute and move on.
In scenario 3:
I find this highly unlikely at this stage as there is no signs of distribution yet.
Can play out in two ways.
1)Could be a failure to genuinely break through 5.2 creating an upthrust then back below it. Examples could be a sell on the news scenario
2) Pros start distributing and we see the red line in the chart play out. The second attempt towards the 5s will have less volume followed by some no demand setups
@nickd Yep that is a possibility. Would be scenario 2 and one I would probably prefer as a longer term holder as I have highlighted the possibility of a handle formation around 5c in the first post above. The next consolidation phase will either occur in the next weekly candle or the one after, but that is for the pros running the show to decide.
However due to the current momentum, filling the window/gap may not be very likely for now (Going to get through support in that 4-4.2 area) and have missed the window of opportunity a few days ago when it tried but found no supply. It is going going to have to either be a retrace or a bigger shake rather than a pullback. The bulls were in full control this week with a full Dominant White Candle (or the Japanese would call it Marubozu) so they may have some bullish intentions next week.. who knows.
I also see a pattern occurring here resembling similar behaviour before the first run last year (Have labelled A-F for reference).
WEEKLY CHART
Have a great weekend all.
