The price took the correction until point C of the pattern which is an ideal ultimate target for the shorts who followed this pattern. Recently after the correction, it rose and broke out it volumes above the PRZ.
Considering at 80 and the price at the major from where it had been rejected twice before, the price may come down to have a pull back test. If the price bounces off the PRZ or the , this PRZ/ will become a strong .
On the other hand, breaking and sustaining below 3720 and the red trendline will confirm the downfall.
We can see a , which has a fib price extension of 2 at 4042. Above this level the price may have a good long rally.
If price tests the prz and bounces off, then go long above 3720 or 3815. You could 6-10% rise until 4042. if the price sustains above 4042 add more qty and have trailing stoploss. Strict stoploss at 3720.
A fall up to 3650 could come below 3720.
Happy trading :)
This is not investment advice. Please consult your financial advisor before investing.
X- first swing low
A- first swing high
B-Mid swing ( correction after an impulse)
C- second swing high
D- second swing low(forecasted)
After joining the XA line, the AB line will be the retracement. This retracement will be measured with Fibonacci levels. From B to C another impulse will be drawn and then D will be an Extension.
This is the nomenclature for bullish patterns. Similarly for bearish patterns, replace low with high from point X.
As per selecting which pattern to choose it depends on B retracement from A and C extension from A and B. These fib extensions and retracements help us to choose the pattern, thus allowing us to mark a potential reversal zone or point D.
It will be confusing at first but with practice, you can easily apply these. I refer to Scott M. Carney's textbooks on Harmonic trading Vol 1,2, and 3.
Visit the harmonic trader website and search for harmonic patterns. (Look at those patterns and understand what's happening)
You can watch his videos on youtube for more clarity. For advanced information, refer to the textbooks.