Short-Term Levels Define the Next Test
The interim swing high of $3.33 from Tuesday is the next short-term upside target. It would need to be exceeded before the recent lower swing high of $3.38 could be challenged. Since the top resistance zone has been identified by a series of lower swing highs, a change to that pattern would occur with a rally above the $3.38 high. That could then be the beginning of further upside pressure.
Weekly Compression Signals Expansion Risk
Range compression is also evident in the weekly chart, as this week completed a double inside week pattern. Price compression leads to price expansion and the tighter or longer the compression develops, the greater the potential response once a breakout occurs, either up or down. The larger developing bearish pattern, along with persistent resistance near recent highs, supports the potential for a broader reversal of the current advance. That advance would then have completed the first pullback after a significant break below a long-term rising trendline in February.
Trendline Break vs Recovery Scenario
Once prior support of the trendline switches to resistance, the bearish trend is positioned to continue. That is, unless there is a decisive bullish continuation signal generated. That would begin with a sustained reclaim of the 200-day moving average, now at $3.44.
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Source: Original Article
