I hope everyone had a very nice and Merry Christmas!
We've seen the bulls step in and defend closes above the $3,700 support level. However, I don't really expect this support to hold for long. There are several factors that lead me to thinking this way.
First, charts in this pattern typically don't trad sideways bouncing off support without giving out. If they have support increasing, there's a case for bulls to show up. I've personally never seen a chart pattern play out like this before, so that's one thing that leads me to think the bears have the edge.
Secondly, it looks like we already saw the peak of bull volume on the daily and we haven't had any more real bull volume to follow it up.
Thirdly, prices haven't really shot down and collapsed yet. For me, this means the bears haven't even tested the bull support, yet bulls have failed to keep increasing prices upward.
Fourthly, on the 4-hr chart above, you can see the huge long bear stick that drove prices down to support. The interesteding thing here too is that volume wasn't crazy high. Sure, it's been the largest we've seen on the 4-hr in a few days, but it's a very large magnitude candle. To me, this shows the floors not being defended by any bull offers.
For now, the resistance in this small channel is $3,840. We will either see a break of this resistance or a break of the floor supports. Which is first will determine market movement most likely.
