Bear trap awaiting completion

It seems that of the three likely scenarios that I described in the previous report, the first is implemented: “Necklinebreaks down, shorts enter the market howeverEMA below act as support. That would be a classic bear trap. In this case, the price should find support at the EMA levels and quickly return to growth beyond the upper limit of the range, knocking the bears out of their positions. ”

It is such a development of events that we observenow, after several unsuccessful attempts to break down the neckline. Twice the price was absorbed at the EMA 100 level on the daily chart, and this indicates the continued support of the EMA trend. A break down the neckline and closing above it only add confidence that the bulls are in control.

The next logical move within thisthe scenario would be a breakthrough of the opposite border of the range, which would also mean a significant breakthrough and closure above the downtrend line. This would signal not only that the breakthrough failed, but also the completion of consolidation.

Closure above just formeda local peak of $ 9,400 forces the bears to start closing their short positions, thereby contributing to an increase in prices. Some of the bears may also conclude that the bear case is no longer valid, and not only close the short, but also open a long position. Of course, traders who monitor the development of the situation in the flat will see this as an opportunity to open a long on the breakdown of the trend line in anticipation of the next stage of the bull rally. This can lead to strong volatility and a sharp increase in trading volume.

Thus, price movements throughoutthe last six weeks or so will be seen as a consolidation and retest of daily EMAs, which logically implies the continuation of the rally. At the same time, a breakthrough of the level of $ 10,500 will continue to be crucial for the long-term trend.

Conclusion

The described scenario is confirmed bya break above the last local maximum at $ 9,400, which is a signal to enter the market for flat traders who want to open a long line to break the trend line. Understanding that the bears are currently trapped can serve as the basis for another confident upward movement. At the same time, a breakthrough of the level of $ 10,500 remains critically important for obtaining an impulse sufficient to continue the long-term rally.

 

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