Hi all,Today's price action has confirmed Scenario 1 from my...

Hi all,

Today's price action has confirmed Scenario 1 from my post last night (Post 5847931 at 19:42). This is not surprising given that the Stochastic was still pointing up at the time it was written, although the strength of today's move, following on from yesterday's strong rise, was more than I anticipated.

Tomorrow's trading may well see another rise, given that the Stochastic is still pointing up and it is likely that institutional investors have now been alerted to what appears a sustained rise and not just a one day spike. Of course the alternative scenario is that after two days of strong rises, price will retrace and consolidate, prior to its next leg up. I think this is the less likely option.

I have included two charts covering these two scenarios, so that regardless of which one plays out, you can at least have considered how you will react to either one and know what price targets/triggers may be of significance during the day.



SCENARIO 1: PRICE CONTINUES UP (see chart above)
I have mentioned before that the pitchfork I am still using remains (for the moment) a valid descriptor of price movement and that price has respected both the marked warning lines and the 0.618 Fibonacci divisions between them thus far. When it ceases to be effective I will replace it. Note that today's high made an exact touch on the 0.618 line (as circled) before settling back to close slightly lower.

Successive, logical price targets for 21 Oct, as per the chart, are where tomorrow's candle will cross each of the lines above the current close, marked as points 1, 2, 3 and 4. These levels correspond to 31, 33.5, 35 and 38 cents, respectively. As each one is reached, the next becomes the logical target for the day's high.



SCENARIO 2: PRICE RETRACES (see chart above)

Should price run out of steam on 21 Oct and retrace to consolidate, there are logical price levels through which it would pass on its way down. To my mind the most likely lows for a retracement from its high of 29.5 cents would be as follows. As each one is passed, the next becomes the most likely support/retracement level.

0.250 retracement = 25 cents
0.382 Fibonacci retracement = 23 cents
0.50 retracement = 21 cents, and
0.618 Fibonacci retracement = 19 cents.

Given the strength of the rise from 12.5 cents and the significance of the 0.618 division already touched by price on this chart, I would tend to expect a 0.618 retracement to 19 cents as the most likely outcome if Scenario 2 plays out. Note how three of these four retracement levels just happen to coincide exactly with existing lines on the chart.

COMMENT:
The above is my opinion only, but I will be using the specified price levels, either up or down, to plan my day's trading depending on which scenario plays out. I suspect it will be Scenario 1. I hope you find these proposed price milestones of some use in planning your day as well, or at least in confirming your own separate assessment.

Comments or alternative views welcomed.

Regards,
Bones