On the Daily chart above, we could see that price couldn’t sustain its steep downward move as it advanced toward the lower edge of the narrow channel; hence it reversed sharply to break above the upper edge of the channel – breaking above previous day’s highs in the process. Also, if we take a closer look at the Daily chart – precisely the previous two trading days’ candles (last week Thursday and Friday) – we would observe that the whole of Thursday’s price action occurred within Friday’s candle (price range), which resulted in an “engulfing-candle” formation. An engulfing candle at the end of a steep downward move such as this gives us a good probability that price is set to reverse its direction. Furthermore, Price-break above the engulfing-candle earlier today buttressed the possibility of further movement of price downward.
On the H4 chart above, price broke the most recent swing high @ 94.54 (which we’ve highlighted using the blue broken line) upward. That automatically shifted our bias in favor of an upward price move. The green horizontal line @ 93.41 highlights the most recent swing low, and as long as price stays above it – in the absence of any new and higher swing low – our bullish or upward bias remains intact. However, we still need our Hourly charts – using Fibonacci retracement levels and important support levels – to seek promising areas to take our Long positions. Price pattern on the hourly must also be forming higher highs and higher lows. Please note that our aim is to buy a dip in today’s up-trend.
Also, PATIENCE is the key here: we need to patiently wait for the hourly retracement. It might happen, and it might not.
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