The question on my mind - is this some sort of double top formation that could lead to a decline in price? I am going try to answer the best I can with justification for why this is not, in my opinion, a double top and we are shaping up for push higher; at least to previous highs again and maybe a bit more(from there we analyze the price again).
Justifications
Structural:
In the short term, I think we need to test the 62000 range as that lines up with a HVN and the monthly VWAP. If we can get above this level and hold I think we could get a continuation at least to the 70K range. From there we would analyze again and check the price action.
As noted on the chart, we could have another drop to the 0.5 retrace which looks to be a logical and would still support a continuation to the highs from the oversold condition.
Justifications
Structural:
- Looking at the two channels gives a picture of an upward trend in both cases. What is interesting is the is rounding we saw in the run up to the April top and a 3 push failure pattern that you see in distributional structures; signifying the exhaustion of demand.
- Placing a volume profile of both structures, it shows an increase in activity at the very highs of the April top with a high POC in the trend channel. We look at the current position we see that is the opposite. We have a lower POC and what we see is a HVN(contracts have been traded a this higher level) yet the swapping of hands so to speak, is reduced across the upper part of the trend channel favoring some acceptance by both buyers and sellers as this higher level.
Time:
- A promising aspect of the November price action is the ability to hold price at the higher levels. This is what we want to see when we favor a re-accumulation and subsequent continuation of higher prices.
- By simple visual observation we can see how in April price supply easily caused an imbalance at the higher prices and price drop significantly; no demand could support the price. The current price action indicated some acceptance of the price at this level.
Volume:
- Looking at the current dips from the tops we see volume on the supply side in April 21 was higher whereas this time we have a lower volume indicating some confidence that this is not a downward movement supported for continuation. The aggressiveness that was there before, looks to be less dramatic.
In the short term, I think we need to test the 62000 range as that lines up with a HVN and the monthly VWAP. If we can get above this level and hold I think we could get a continuation at least to the 70K range. From there we would analyze again and check the price action.
As noted on the chart, we could have another drop to the 0.5 retrace which looks to be a logical and would still support a continuation to the highs from the oversold condition.