Hey guys! First time publishing an idea, please bear with me. :) I don't know if this idea is kind of obvious or blatantly ignorant, but I'm just doing this to learn. I'm open to any criticism.
So this idea is basically based on the longer term channel (thick purple lines) VS the shorter term wedge (thin purble lines). I believe there's a high probability that the price will not move outside the long term channel. Therefore, it should continue in upwards direction once it bounces off the line.
The short term wedge isn't reliable by any means in my opinion. If on Monday 21st the wedge breaks immediately, I believe it will follow scenario A: The price will move towards the blue dash resistance level into a retracement until it bounces off high term channel line (Entry Point 2) and shoots towards year high (green dashed line) and perhaps beyond. Scenario B would occur if wedge meets channel border, in which I believe it will still break and creates Entry Point 1.
I believe Entry Point 2, whether scenario A or B occurs, offers a safer approach since it would have been confirmed that the long term channel theory is holding. Furthermore, it's a bit farther away from the support level (red line). If I were to swing trade this, I would set TP at year high (green dashed line) and SL at the red line support.
If I were to approach Entry Point 1 I would still use the red support line as SL. There's less wiggle room here but I believe that's more appropriate considering we wouldn't have confirmation on the long term channel theory, therefore it has a lower probability to succeed.
So this idea is basically based on the longer term channel (thick purple lines) VS the shorter term wedge (thin purble lines). I believe there's a high probability that the price will not move outside the long term channel. Therefore, it should continue in upwards direction once it bounces off the line.
The short term wedge isn't reliable by any means in my opinion. If on Monday 21st the wedge breaks immediately, I believe it will follow scenario A: The price will move towards the blue dash resistance level into a retracement until it bounces off high term channel line (Entry Point 2) and shoots towards year high (green dashed line) and perhaps beyond. Scenario B would occur if wedge meets channel border, in which I believe it will still break and creates Entry Point 1.
I believe Entry Point 2, whether scenario A or B occurs, offers a safer approach since it would have been confirmed that the long term channel theory is holding. Furthermore, it's a bit farther away from the support level (red line). If I were to swing trade this, I would set TP at year high (green dashed line) and SL at the red line support.
If I were to approach Entry Point 1 I would still use the red support line as SL. There's less wiggle room here but I believe that's more appropriate considering we wouldn't have confirmation on the long term channel theory, therefore it has a lower probability to succeed.
Comment:
Clarification on long term channel (thick purple lines): The upper line is obviously based on the peaks at 12560, 12685 and 12821. The bottom line is based on the support levels at 11951, 12008, 12036, 12064 (around 9 October). Since this is a while ago, it should be considered less reliable compared to the upper line. Ideally, we would want to see Scenario B happen and let it bounce off Entry Point 1 to confirm the bottom channel line, giving Entry Point 2 a higher probability to succeed.
Comment:
9:45 Looks like Scenario A is happening, with price taking out blue dashed resistance almost immediately. I do expect some retracement and movement towards Entry Point 2. The whole idea can be scrapped if we see a huge surge without further retracement.
Other theory is that I drew the lower channel line a bit too wide and Scenario B into Entry Point 2 is happening. lol
Other theory is that I drew the lower channel line a bit too wide and Scenario B into Entry Point 2 is happening. lol