As a refresher on the pattern that I've been covering, I'll walk you through it from the beginning. On the left middle of the chart, the pattern starts with a which produced a spike down (pink arrow,) followed by a rally above the 50 (purple arc,) followed by a that dropped below the 20 (in blue.) From there, we saw a spike back above the EMAs, and then a big drop before the pattern began to repeat itself.
If you look at the big in the pattern, you can see that it began with a smaller , right after the spike. So, right now, we're forming a right after the most recent spike. Sure, the movement after the spike was a little extended, but it was generally the same, and that's what matters here. Now that we're forming a after the spike, we need to be on the lookout for a continuation breakdown, similar to what we saw after the first spike. Also, if you look at the time that has elapsed from the bottom of the first to the beginning of the selloff after the first spike, the time between the bottom of the big , and now, is relatively close. Therefore, we should see some selling emerge, if this pattern is going to continue. The 20 and 50 EMAs are moving into the , and the top of the newly formed are fast approaching. Any one of those overhead resistance levels could produce a breakdown to the red neckline of the pattern. From there, we will have to assess how price reacts to that level. A breakdown would be very , and it could follow the general breakdown path that I've outlined on the chart, in red and green arrows.
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.***
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