In the monthly chart, on the left-hand side, it can be observed that 2017 highs acted as a strong resistance. But once this level was taken out, it started acting as a support in 2022. Holding the very basic idea that a resistance once taken out, start acting as a support. You would observe this concept several times on this chart.
On the right-hand side, we can see a shift in structure from LL-LH to HL-HH formation near the above-mentioned levels (2017 highs). It was analyzed and explained in the following idea-
The resistance area of 25200 was broken out in March2023 and later tested twice in June and September2023. We can see a range creation between 31200 and 25200. The 25200 resistance now acted as a support and the range broke out in October2023.
It continued higher with a small area of consolidation in-between November, which finally broke out this month (December).
Currently we are facing a pullback from near 44700 to 40132 on this chart. The volume was high during this pullback but there is no follow through. This is indicating that this pullback could be just a shakeout.
⚡I would discuss three scenarios here for different type of traders: -Overtly Bullish -Moderately bullish -Cautiously bullish
🚀Overtly Bullish- This is the most probable scenario at this point and is suitable for short term traders. Market will resume higher after the shakeout. There is a wholesale entry near 40000-40100 zone with stop below this zone. Targets could be 44500/48200 for short term.
🚀Moderately bullish- As per this scenario, we have stretched too far and expecting further pullback. This scenario is suitable for those who have intermediate term perspective. In this case 38000 (previous resistance) may act as support, so a bounce play could be an option from there. The stop would be below 38000 and target 44500 or higher.
🚀Cautiously bullish- This scenario is for those who are looking for longer term opportunities in the market. They would ignore entries near the higher prices and wait for deeper corrections. For them expect a break till 35000/33400 could be best where more buyers would show up in the October2023 breakout zone.
Which category do you belong to? Write in the đź’¬section below.
Do boost🚀the idea if you think it was informative. Regards.
Disclaimer: The levels discussed are for educational purpose only and not a trading or investment advice.
Comment
Two trade setups near 40200 support- A- Market holds support > gives a buying opportunity > resumes higher B- Market breaks support > gives a sell opportunity > resumes lower
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