We’ve been — for quite some time now — inside this (log scale) channel where bull runs or re-accumulations are decided. You may look at it like the price action has requested for a time-out. But, like in Basketball, the time-out is short not lasting forever.
The way I see this, the channel can be divided in two sub channels: one red on the bottom, and one green on the top.
When price action is fighting on the red channel we’re in the cautious area. Moves below it (most of the times) mean re-accumulation and the more days it stays below it the more likely it will stay there for quite some time before revisiting it again. However, even if we move below the red channel, what I’m expecting is re-accumulation with a steady but slow move up (red rectangles). Not as exciting as a bull run but a good place to be anyway for the ones excited with the long-term.
On the other hand, the green channel is a good place to be, because it is more likely for a bull run. Historically, this channel was the launching pad for some of the most relevant bull runs (green rectangles) like 2013, or 2017, and well, I’ll consider the run on 2019 too. Likewise, the more days the price action stays above it the more likely it is for a bull run to be confirmed.
Other patterns and indicators
The huge triangle formed during the bear trend, which has been referenced for quite some time, has been broken above which is a good indicator of us leaving the multi-year bear trend. Also, having tested and being above the 20 Week MA (black line) is a good indicator too and a good re-accumulation support. Anyway, these without the green channel being pierced is not enough for a bull run confirmation in my opinion.
Tension is building up with the low and , and therefore a move is expected soon. I’ve been asked about those insignificant small price moves recently and I’d like to stress that this is the channel everyone hoping for a bull run is or should be looking at, instead of looking at lower time-frames. If you believe in a price with 5 or 6 figures like I do, the higher time frames (i.e., daily, weekly, mothly) are what you should be looking at.
A move to approx. 13800 would make things more interesting and likely for a bull run confirmation. A move to approx. 10800 or below would probably mean re-accumulation continuation therefore this means I would expect always the channel to be revisited.
Published at Sun, 18 Oct 2020 09:40:28 +0000