Yeah, a really nice example. When I've written in the past that TA really is quite simple, it's using simple techniques like S/R and S/D, but these sorts of little nuances are what make them effective. As in your example, it's all about where you're looking.
I've seen a lot of people even failing to go back months or weeks in time and are only looking at recent PA for what's going to happen.
The problem is it's all very subjective. Just looking at that chart I would say a big line is the one in blue. Lots of touches (red), turns from resistance to support and even a fakeout in the middle. So to me the current price is bouncing off support and on the way up...
It depends how you trade though, for me I'd put a sell stop below the blue line and catch all the trapped traders... but it's subjective...
It is indeed subjective.
That area that you've marked the blue line from was actually from a bounce on a demand level, so I wouldn't necessarily call it a fakeout. (I appreciate that you're not looking at the entire chart here for overall context!)
As such, we've dropped below that blue line you've drawn too, but I'm interested to see how it plays out. I can certainly see why you've picked that line.
"we've dropped below that blue line" so I'd be making money right now ? sweet ! lol
No, the opposite. You said it would bounce off support and head up ;-)
ah, but I didn't say I would buy, I said I would put a sell stop below the blue line, so I'd be short right now... he he
So you did, my mistake!
no worries, I'm 100% contrarian. I know it's easy in hindsight (like all the gurus do..), but I would also have shorted that part I called a fakeout, when it broke back under the blue line.
Most people would have went long on that breakout, so I would've had a sell stop under that line and pick up all those sweet stop losses when people panicked. Look at all those lovely red candles of pain immediately after, yummy ! lolol