In my own opinion, last week’s collapse was very important for buyers and you may ask why. Well, first, the faster the drop, the more aggressive the recovery.
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
Traders at the wrong end of the trade can “die” once rather than 1000 cuts they are often subjected to with every bear soldier lower low. The depreciation was brisk and look what happened. The middle BB was tested and we could see clear price rejection as the long lower wicks hints of.
Besides that, prices found support at the 1st Fibonacci extension level at around $150 and even though it is not perfect, you get my drift right? Now, here’s the deal, given the drastic drop witnessed last week: don’t expect miracles.
We might see a recovery in the lower time frames but chances of price action breaking above or below last week’s limits are slim to none.
Prices will remain bound within a $100 range as shown by the 1st and 2nd Fibonacci extension levels in the next couple of days.
In the daily chart, there are two levels that are important. For sellers to profit, prices might take advantage of the bearish momentum and break below the 61.8% Fibonacci retracement level drawn from recent high lows.
Once they do, buyers should be preparing for longs at $110. Of course, it’s ideal if that happens BUT, notice the consolidation along $180 and hints of buy pressure? That is really important and because of this new-and exciting-developments, we should look for well-developed buy entries in lower time frames.
The consolidation along $180 couldn’t be well demonstrated than in our entry chart.
Notice how bull momentum is building up and how buyers continue to wriggle its way up despite the resistance from the middle BB.
As long as prices continue printing above that level, buyers have a reason to buy. In fact, I recommend buys with stop losses below the double bar buy reversal at $165.