Interpretation of charts: The charts below are detailed with monthly and weekly structural levels. These levels are the closing prices of either the monthly (blue line) or weekly (green line) candles. Furthermore, levels which are not areas where price action has formed a reversal are excluded. Thus, the structural levels defined on the chart are potential areas of both support and resistance. Monthly structure carries more weight than weekly. The weekly chart is characterised by broad areas of support (green) and resistance (red) which are defined as potential reversal zones.
The rebound off the bottom formed at $6150 continues as price action managed to break through and close above overhead resistance at $6375 yesterday. This resistance level has shown to be a significant one over the past few months. A close on the daily chart above this level will help to build the bull case once again. I would like to see a retest of $6375, but we may not get one before going higher. I would, however, expect some form of correction after the gains seen over the past few days.
Over the longer term, the most important thing to keep an eye on is price action keeps forming higher lows. If the current swing low holds, then this trend is maintained. Price action is now trading above the EMA8 and approaching the EMA20, thus it is by no means out of the woods yet and the bears are still in control.
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On the short-term chart, we can see that the breakout of the symmetrical triangle has continued to gain steam, breaking through the overhead resistance. Furthermore, we have seen a bullish crossover of the moving averages, indicating a buy signal to me. I am looking for entry points into the long trade now, particularly a successful retest of resistance now turned support at $6430. A stop loss for the trade will be placed at either the bearish crossover of the EMA8 and MA50 or a break to the downside connection the series of higher lows (red line), whichever comes first. Profit targets are set at the weekly and monthly structural resistance levels.
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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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