▋Observation & Meanings:
▪Price has broken out of the Broadening Wedge to the upside — a strong move led by bulls.
▪It then pulled back after reaching the 100% projection of the previous upswing, which also marked the likely extent of the retracement.
▪A break below the minor low (a) suggests short-term downward pressure.
▪However, the overall uptrend structure remains intact as long as the main low (A) holds.
▋What’s next?
Trading a retracement is always tricky — by nature, it means going against the prevailing trend.
▪Question 1: Is there anything to do when price falls below the minor low (a)?
Often, the best move is to stay patient and let the market reveal its intentions, some setups may offer opportunities:
▫The main prior low could act as a key short-term support, as it aligns with the 100% retracement of the previous upswing.
▫For aggressive traders, a quick short toward that level may be an option.
▪Question 2: When will a new trend begin?
▫Bearish scenario: A confirmed break below the main prior low could signal the start of a more sustainable downtrend.
▫Bullish scenario: Aside from Aside from (1) a direct breakout above the previous high (B), signs of strength may also come from:
(2) A clear lower high or
(3) A consolidation range, followed by a strong upside break.
In this case:
- The prior high (by definition) marks resistance.
- However, there’s also a tight congestion area before that high, which may act as the real barrier — potentially even more significant due to its cluster of price action.
▫Once early trend signals appear, the next step is to assess if the structure supports a lasting trend.
▋The 3 big zones:
▪Uptrend Zone
The market is likely regaining upward momentum when one of the following occurs:
1. Price spikes above the previous swing high at point B.
2. Price breaks the tight congestion area to the upside.
3. A new consolidation range forms and breaks to the upside.
▪Downtrend Zone
A clean break below the main prior low (A) would likely confirm bearish control and may open room for further downside.
▪Ambiguous Zone
If price fails to meet the conditions for either an uptrend or a downtrend, it’s likely to remain in a drifting, indecisive state.
▋Mental Notes:
▪Don’t predict the price, trade the price. Have a plan, but not blindly follow.
▪The market will always find ways to surprise. Stay open and follow the flow.
▋Not Financial Advice
The information contained in this article is not intended as, and should not be understood as financial advice. You should take independent financial advice from a professional who is aware of the facts and circumstances of your individual situation.
▪Price has broken out of the Broadening Wedge to the upside — a strong move led by bulls.
▪It then pulled back after reaching the 100% projection of the previous upswing, which also marked the likely extent of the retracement.
▪A break below the minor low (a) suggests short-term downward pressure.
▪However, the overall uptrend structure remains intact as long as the main low (A) holds.
▋What’s next?
Trading a retracement is always tricky — by nature, it means going against the prevailing trend.
▪Question 1: Is there anything to do when price falls below the minor low (a)?
Often, the best move is to stay patient and let the market reveal its intentions, some setups may offer opportunities:
▫The main prior low could act as a key short-term support, as it aligns with the 100% retracement of the previous upswing.
▫For aggressive traders, a quick short toward that level may be an option.
▪Question 2: When will a new trend begin?
▫Bearish scenario: A confirmed break below the main prior low could signal the start of a more sustainable downtrend.
▫Bullish scenario: Aside from Aside from (1) a direct breakout above the previous high (B), signs of strength may also come from:
(2) A clear lower high or
(3) A consolidation range, followed by a strong upside break.
In this case:
- The prior high (by definition) marks resistance.
- However, there’s also a tight congestion area before that high, which may act as the real barrier — potentially even more significant due to its cluster of price action.
▫Once early trend signals appear, the next step is to assess if the structure supports a lasting trend.
▋The 3 big zones:
▪Uptrend Zone
The market is likely regaining upward momentum when one of the following occurs:
1. Price spikes above the previous swing high at point B.
2. Price breaks the tight congestion area to the upside.
3. A new consolidation range forms and breaks to the upside.
▪Downtrend Zone
A clean break below the main prior low (A) would likely confirm bearish control and may open room for further downside.
▪Ambiguous Zone
If price fails to meet the conditions for either an uptrend or a downtrend, it’s likely to remain in a drifting, indecisive state.
▋Mental Notes:
▪Don’t predict the price, trade the price. Have a plan, but not blindly follow.
▪The market will always find ways to surprise. Stay open and follow the flow.
▋Not Financial Advice
The information contained in this article is not intended as, and should not be understood as financial advice. You should take independent financial advice from a professional who is aware of the facts and circumstances of your individual situation.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.