Here on the weekly chart, we can see that price has printed half of an enormous pattern, and it’s a textbook formation thus far. Since the beginning of February, price has been in an uptrend (pink channel) on the weekly chart. However, we printed a huge candle after we exploded above the weekly 200 (in purple.) Price hit a ceiling though, right at the weekly 50 (in orange.) As you can see, the current candle is in the form of a huge star. So, I think this weekly candle will close tomorrow evening, and we will begin the next weekly candle. Therefore, if we close this candle in the form of a star, it will have halfway completed a textbook pattern on the weekly time-frame.
Many of you are probably wondering what that means. Well, an is a reversal formation. Typically, the candle that rises before the star, is completely erased on the other side of the . In other words, if this pattern plays out, next week could completely erase the gains that we have seen, since the breakout above the weekly 200 . I’ve shown in other analyses how we were just rejected at the top of a huge , and I’ve shown how we could return to the bottom of that channel. For clarification, see the previous analysis linked below. This pattern is suggesting that we could see a fall to the bottom of that channel, and potentially even lower.
As I have in other analysis, you can see that there is a big nasty red arrow on the chart, showing how could wipe out an enormous amount of value next week. That’s because for this pattern to complete itself, we would have to see a powerful follow through on the reversal. Keep in mind, this pattern is NOT complete. However, it is set up perfectly to fulfill itself. The exciting part, is that if we do see an explosive retracement back to the 200 (in purple) next week, that might not be the end of the selling. In fact, evening stars often produce several candles of downside continuation on the back of the pattern. So, we will have to see how this plays out. I just wanted to bring it to everyone’s attention, so that you all understand the potential downside risk.
The weekly 50 has stopped dead in it’s tracks. From this point, the most likely direction we will traverse, is to the downside in the coming weeks.
To anyone out there who is a pattern junkie, wondering how this is a “textbook” setup, without a gap up to the , I only have one thing to say — this is . It’s a 24 hour market. There isn’t a single gap on this chart. As a result, I have excluded that textbook requirement.
I’m the master of the charts, the professor, the legend, the king, and I go by the name of Magic! revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-
Published at Mon, 15 Apr 2019 05:28:06 +0000
