Broadening Pattern Support idea with a Counter Trend Twist
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The chart displays a classic broadening pattern defined by the yellow ascending trendline and the red resistance line, which form a widening range. A white counter-trendline has emerged, offering a subtle confirmation of a potential reversal or continuation of the trade.
While this setup doesn’t qualify as a textbook breakout due to the limited touches on the counter-trend line, it still presents a compelling confluence near a critical support zone. The analogy to RSI divergence is applicable here—just as RSI bullish or bearish divergences strengthen setups by showing momentum shifts, a counter-trend breakout near support adds an extra layer of validation to this trade idea.
Although the counter-trend breakout isn’t overly powerful, its positioning above the support trendline enhances the strength of the overall setup, making it a viable trade backed by multiple technical factors. This could be considered a ‘stronger support’ trade, where the combination of trendlines and a minor counter-trend breakout signals potential upward momentum.
RSI analogy explained :
This setup can be compared to the analogy of RSI bullish divergence followed by a counter-trendline breakout. In a typical divergence setup, RSI makes a higher low while price makes a lower low, hinting at a potential reversal. However, the setup truly comes alive when price breaks a small counter-trendline, confirming the divergence. The counter-trendline breakout doesn’t have to be powerful—just a trigger that completes the bigger picture.
Similarly, in this chart, price has been respecting a strong upward trendline, bouncing off it multiple times and forming higher lows. Now, with price sitting on this well-defined support and giving a minor counter-trendline breakout, the setup becomes active. The counter-trendline breakout acts like a small cog in the wheel—it doesn’t need to be perfect or have many touches. Its role is simply to act as a final confirmation of the setup, aligning with the larger structure already in place.
Thus, this isn’t just a random breakout play; it’s a well-constructed, stronger support trade idea that gains validity from the confluence of multiple technical signals.
The chart displays a classic broadening pattern defined by the yellow ascending trendline and the red resistance line, which form a widening range. A white counter-trendline has emerged, offering a subtle confirmation of a potential reversal or continuation of the trade.
While this setup doesn’t qualify as a textbook breakout due to the limited touches on the counter-trend line, it still presents a compelling confluence near a critical support zone. The analogy to RSI divergence is applicable here—just as RSI bullish or bearish divergences strengthen setups by showing momentum shifts, a counter-trend breakout near support adds an extra layer of validation to this trade idea.
Although the counter-trend breakout isn’t overly powerful, its positioning above the support trendline enhances the strength of the overall setup, making it a viable trade backed by multiple technical factors. This could be considered a ‘stronger support’ trade, where the combination of trendlines and a minor counter-trend breakout signals potential upward momentum.
RSI analogy explained :
This setup can be compared to the analogy of RSI bullish divergence followed by a counter-trendline breakout. In a typical divergence setup, RSI makes a higher low while price makes a lower low, hinting at a potential reversal. However, the setup truly comes alive when price breaks a small counter-trendline, confirming the divergence. The counter-trendline breakout doesn’t have to be powerful—just a trigger that completes the bigger picture.
Similarly, in this chart, price has been respecting a strong upward trendline, bouncing off it multiple times and forming higher lows. Now, with price sitting on this well-defined support and giving a minor counter-trendline breakout, the setup becomes active. The counter-trendline breakout acts like a small cog in the wheel—it doesn’t need to be perfect or have many touches. Its role is simply to act as a final confirmation of the setup, aligning with the larger structure already in place.
Thus, this isn’t just a random breakout play; it’s a well-constructed, stronger support trade idea that gains validity from the confluence of multiple technical signals.
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