Having exited previous short when we moved out of a 2-week long descending channel, I am now on the look out for a new setup. While we have left the descending channel, current sentiment remains bearish:
- 4H and higher timeframes remain below the Kumo.
- Despite a significant short-squeeze, bears have been able to robustly defend resistance around 6600.
That said, there are signs a reversal is developing:
- A bullish divergence at higher timeframes as we moved out of the descending channel (suggesting the downtrend was coming to an end).
- As shown on the 4H chart, an ascending triangle has now formed with at least two touches along either axis.
- If the ascending triangle holds, a breakout is possible in the next 24 hours.
Conclusion: No open position but watching a breakout above 6650 and holding on 4H chart.
- 4H and higher timeframes remain below the Kumo.
- Despite a significant short-squeeze, bears have been able to robustly defend resistance around 6600.
That said, there are signs a reversal is developing:
- A bullish divergence at higher timeframes as we moved out of the descending channel (suggesting the downtrend was coming to an end).
- As shown on the 4H chart, an ascending triangle has now formed with at least two touches along either axis.
- If the ascending triangle holds, a breakout is possible in the next 24 hours.
Conclusion: No open position but watching a breakout above 6650 and holding on 4H chart.
Trade closed manually:
Had opened a small tentative long on Friday as I was going to be away from the computer - the risk:reward looked good and there was a good chance we would see a breakout above the horizontal. As such, the pattern broke down but a tight stop loss was triggered.
Don't think I did anything wrong with the trade and would probably take the same risk again.
Don't think I did anything wrong with the trade and would probably take the same risk again.