1 Day Chart
Price action turned to the downside rapidly yesterday, after failing to break through the overhead resistance of $6775. A sharp decline to the monthly support level of around $6300 took place over the space of a few short hours. The current price level is the structural level at which the left shoulder of the inverse head and shoulders pattern formed. Should this level hold then a retest of the overhead resistance at $6775 may be on the cards again in the next few days. Conversely, if support doesn’t hold at current levels, then a retest of the swing low of $5850 may occur again.
Volume is back to the annual lows again.
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Price action broke to the downside of the lower ascending trendline (yellow dashed line) yesterday right after we published our price analysis. This led to the rapid breakdown in price. Support failed at the monthly structural level but held just below at the weekly level of $6355.
I would expect some sideways consolidation today, with the possibility of a slight rebound to the upside. However, downward momentum may be maintained, and the successive lower support levels may be tested.
If you took our advice yesterday and placed your stop loss below the ascending trendline, then you are out the market now and protected yourself against the bulk of the losses from yesterday. As such, we are waiting for the establishment of some form of trend before taking a position again.
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The concerns that I have had for the past few months have now been met, should we not see a reversal occur at or above $6550, then we could be in for a deep bear market, possibly testing the $4900 level. As it stands currently, price is trading below the 50-week moving average. The next major bearish milestone would be the crossover of the EMA8 and EMA20 with the MA50 on the weekly chart. This has occurred at the end of June. Should the reversal that we are currently seeing on the 4 hour and daily charts not form new highs, then the bears may drive price to $4900.
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Ricki specializes in the field of wealth management with a focus on holistic financial planning. He has a keen interest in the investment fields of property, technology, precious metals and cryptocurrencies. Ricki also holds a Masters degree in Science from the University of Stellenbosch.
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