What's happening on H4
The decline from isn't just being stalled - it's being challenged for a reversal. Price has already broken above the downtrend line that had been driving the market lower this whole time, and has held above it - the last closed price is .
A local high has formed at . This is the first point that will tell us whether buyers have any follow-through: until it's taken out, the move up remains a correction within the larger decline, no matter how convincing the break of the trendline looks.
Why I'm not rushing into buys
Formally, the set of reversal signs is already falling into place: the trendline is broken, the decline has lost momentum, and attempts to push price lower aren't working. But a trendline break on its own is too cheap a signal. A line is drawn through two or three points, and breaking it is often just technical, without any real shift in the balance of power.
I need a stricter criterion. A reversal is confirmed not by a line, but by structure: until the market takes out the previous significant high, it's just pulling back within a downward sequence.
The key level: 4235
My key level is . Only after it breaks will I start looking for buy entries - not before.
The zone between the current price and is neutral for me. Anything can happen here, including a false break above followed by a pullback - this kind of thing happens regularly during reversals, and it's exactly what shakes out the stops of those buying on the trendline break.
If is taken out and the market holds above it, the picture changes fundamentally: at that point we're no longer talking about a correction, but about a new uptrend forming, and working from the buy side becomes justified.
The range the market is trading in
For the past few weeks, the market has been moving within a range of - . The current price of is closer to the lower half, meaning there's still room to run toward the top of the range, but a pullback to wouldn't require anything out of the ordinary either.
This is the main argument for patience. Inside a wide range, any local move can easily be mistaken for a trend, when it's really just another pass from edge to edge.
What would invalidate the reversal idea
Until is taken out, the downside scenario stays the priority. A return of price below the downtrend line would kill the reversal idea entirely: it would mean the break higher was false, and the market is going back to the prior logic of decline from .
Watch how price reacts at the key levels - that's where the answer will come from, no guesswork needed.
In short
- Price has broken above the downtrend line, last close at
- A local high at has formed, but a new high hasn't been confirmed yet
- My key level is - only after it breaks do I look at buys
- The market has been inside - for the past few weeks, current price in the lower half
- A return below the trendline invalidates the reversal scenario
