The epic struggle between bulls and bears continues, with neither side willing to accept defeat. After a smaller than expected fall a couple days ago, the coins have rallied back to the 78.6% retracement level and have held their ground at that level for the past day or so.
As you can see in the image below, price continues to be supported by a trendline from the October low. The line has been tested and held for seven tests so far.
Meanwhile, it appears a pennant is forming which I presume most traders can readily see. I have labelled the pennant as I see it. If I am correct, the final leg up is almost complete. Regardless of whether or not my interpretation is correct, the pennant is there, and it WILL breakout one way or the other in the very near future, I suspect. I see there is an energetic time just six hours or so from now, so perhaps that is when the break will occur.
While I anticipate a breakdown, I for one will certainly have a buy order at the ready. In the event the break is upwards, the market might rally substantially. Conversely, if the market breaks down the fall may be equally dramatic. The thing is, patterns like this are OBVIOUS to most traders, even rookies. When pennant lines break, traders everywhere jump on it.
The important thing, IMHO, is to wait for the market to tell you what it is going to do before you commit your hard earned money. The market is designed to take the most money from the most people as often as it can. No need to make its job easy!
Let’s look at this market through the lens of a Gann Square. This 34 candle setup on an 8-hour chart suggests that the pennant is due to collapse very soon.
Looking carefully at a close-up of the same chart, you will note that the candle had been following the 4th arcs upwards. But the candles are already underneath the arcs. That strongly suggests that the next move is downwards (to the 5th arc) as we have seen on other charts in other time-frames.
Time will tell soon enough. I would expect that this sideways movement will likely end in the near future. Note that the buy/sell ratio on the price page shows that there are currently more sellers than buyers.
Happy trading! Comment below!
Images from Shutterstock.