ZECUSD
Price volume patterns seem to be one of the most appropriate methods of analyzing a trend based on price fluctuations and volume surge and/or drawbacks. A bullish pattern tends to include the springboard(failed break below support level) near consolidation support, a pullback that retraces 50% of the prior advance in price and high volume consolidation. For contrast, a bearish pattern tends to include thrust near consolidation resistance, a corrective play that retraces 50% of the prior decline and high volume consolidation.
A high volume springboard must include an upward trend in the broad market. In our case, we can see the overall markup trend, this of course, with the exception of the springboard. As you can see with our ZEC chart, after a move higher the price has the potential to move into a flat high volume consolidation with a clear support level. Keeping an eye on the next support level cannot be stressed enough. Its like waiting for the next part of a story to determine the potential play within the next scenario. Our first signal, the spring board (surge off of support) rallying the price up to $400 levels sets out the potential for a bigger uptrend and a breakout after price consolidation is imminent. Remember, a 50% retracement of our last advance to $400 levels signals a potential price consolidation, if this plays out we will see a potential positive rate breakout in price.
Our consolidation support ranging between 0.786 retracement to 0.386 retracement was in play since mid-July and after finding support again at 0.786 the price sprung off with high volume and ultimately broke resistance at the 0.386 retracement level on its way to the $400 mark.
The 50% retracement pullback can be used as a line in the sand to signal a potential bullish or bearish break after consolidation. As stated within the chart, a shallower pullback would mean relatively weak selling pressure. A deeper pullback reflects relatively strong pressure to sell from traders which could leave the inexperienced traders in an unfriendly position. If we do witness a 50% retracement, the next step would be to look for a high volume reversal surge to signal a continuation in the prior advance.
We will be monitoring this one as the trend unfolds. Due to uncertainty I would recommend staying neutral for the time being, jumping in after the trend initiated would be a noob move, wait for the signals and predict the incoming trend.
