First Pullback Following Breakout

A decisive break out of the triangle pattern triggered with a move above 3.02 on November 20. Since the bull breakout has only just begun, an eventual continuation to higher prices is anticipated once the current correction is complete. This is just the first pullback following the breakout through key price levels.

Not only was there a triangle breakout but also a clear continuation of the rising trend that began from the 2024 low in February. It is shown as a rising ABCD pattern (orange) on the chart. Within that trend is a smaller ABCD pattern (purple) that rises from the August swing low. That second pattern triggered a bullish continuation on the rally above 3.02.

Red Candles Show Distribution

It remains to be seen whether the correction will be short in duration or prolonged. Resistance was seen at the top of the rising trend channel last week from a high of 3.56. A sharp intraday decline followed, culminating in a bearish reversal day. The parallel channel shows an organized price structure that reflects symmetry in the behavior or price. A rising middle line (dotted) shows price action roughly equal distance above and below the line.

Channel Symmetry Targets Lower Line

Given that there is symmetry, there is a good chance that the lower channel line is tested as support before the bearish correction is complete. This doesn’t mean that it will reach the lower line, just that there is a good chance that it might. The recent two long red candles, first on November 22 and then again yesterday, show distribution, and they may be providing a clue that there is more selling to come before the correction completes. However, that outlook would switch if there was a sharp rise above Wednesday’s high of 3.47 and it was sustained.

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