We have seen some positive action from the price recently (especially being able to overcome and regain the 3960 level as support).
This is/was the chance for the price to breakout decisively, if it is going to do so.
However, hesitating here and not being able to rip through this resistance after bouncing off of 3960-3940 support area multiple times indicates lack of follow up from buyers.
One more thing to add to the equation is the Wyckoff's law of effort vs result in price movement (the volume and the time required for the price to move in one direction).
If we look at the big red candle we had a month ago (from 4180 to 3700), the ease of movement there was clear. No pauses, no friction, no effort to hold the price whatsoever. It all happened in a single candle.
Now take a look at the slow grind upwards since then. It took almost 30 days for the price to grind up slowly after multiple wicks and rejections and finally come back near the origin of the initial sell-off from a month ago.
Impulsive vs corrective wave.
If it's bullish , and there's genuine demand, this has to break out without any hesitation here. It needs to show a full green daily candle close above 4240 on high volume .
Everything else (hesitation and low volume sideways in this area) will indicate this is distribution before another sharp move to the downside.
Lots of people have high hopes for this move, and who knows, maybe this time it's really different. But I play the probabilities, not hope.
Ideally I'd like to see one last attempt to push towards 4089-4150 area and get rejected there. Wicking above 4180 and then a sharp sell-off is also one of the things that would validate this idea.
Less ideal, but still possible scenario is if the price simply moves sideways for a little while here, hesitating as I described above, and that will most likely be followed by a drop lower.
If looking to short this move, a more agressive approach (high risk - high reward) would be to enter smaller position size here at in 4040-4080 area, and then add after the rejection at 4089-4150 happens. This would allow for a loose initial stop loss and would save you from being wicked out by a potential stop hunt above, while keeping your risk limited.
The conservative and safer approach would be to wait for the rejection to happen first, and then enter on a 4h candle close (with a large wick on the upside).
In case that doesn't happen, then a candle close below 3930 would be additional confirmation that this move has topped out and is ready to go lower.
Targets are:
1. 3780 (conservative)
2. 3685-3670 (main target)
3. 3585-3530 (slightly ambitious, but within reach)
Invalidation of this idea would be a daily candle close above 4240.
This is/was the chance for the price to breakout decisively, if it is going to do so.
However, hesitating here and not being able to rip through this resistance after bouncing off of 3960-3940 support area multiple times indicates lack of follow up from buyers.
One more thing to add to the equation is the Wyckoff's law of effort vs result in price movement (the volume and the time required for the price to move in one direction).
If we look at the big red candle we had a month ago (from 4180 to 3700), the ease of movement there was clear. No pauses, no friction, no effort to hold the price whatsoever. It all happened in a single candle.
Now take a look at the slow grind upwards since then. It took almost 30 days for the price to grind up slowly after multiple wicks and rejections and finally come back near the origin of the initial sell-off from a month ago.
Impulsive vs corrective wave.
If it's bullish , and there's genuine demand, this has to break out without any hesitation here. It needs to show a full green daily candle close above 4240 on high volume .
Everything else (hesitation and low volume sideways in this area) will indicate this is distribution before another sharp move to the downside.
Lots of people have high hopes for this move, and who knows, maybe this time it's really different. But I play the probabilities, not hope.
Ideally I'd like to see one last attempt to push towards 4089-4150 area and get rejected there. Wicking above 4180 and then a sharp sell-off is also one of the things that would validate this idea.
Less ideal, but still possible scenario is if the price simply moves sideways for a little while here, hesitating as I described above, and that will most likely be followed by a drop lower.
If looking to short this move, a more agressive approach (high risk - high reward) would be to enter smaller position size here at in 4040-4080 area, and then add after the rejection at 4089-4150 happens. This would allow for a loose initial stop loss and would save you from being wicked out by a potential stop hunt above, while keeping your risk limited.
The conservative and safer approach would be to wait for the rejection to happen first, and then enter on a 4h candle close (with a large wick on the upside).
In case that doesn't happen, then a candle close below 3930 would be additional confirmation that this move has topped out and is ready to go lower.
Targets are:
1. 3780 (conservative)
2. 3685-3670 (main target)
3. 3585-3530 (slightly ambitious, but within reach)
Invalidation of this idea would be a daily candle close above 4240.
