Upside Channel Breakout Possible

An upside breakout would signal a breakout of the rising parallel channel that shows some degree of symmetry within the price structure of the uptrend. Caution is warranted as there is a strong risk of a false breakout. Nonetheless, the next higher target zone is from around $4.70 to $4.72, derived from two extended Fibonacci levels. A little higher is a potential significant target zone as it would complete a 38.2% Fibonacci retracement of the full decline that began following the $10.03 peak in 2022. The 38.2% level is at $4.77.

Bullish Monthly Signal

Today’s rally triggered a bull trend continuation signal on the monthly chart (not shown) as last month’s high of $4.78 was exceeded. A daily close above that high will provide some confirmation of strength indicated by the upside breakout. Moreover, notice the pullback to a new retracement low of $3.74 on Monday that occurred before buyers stepped in and took back control.

A decisive bull breakout of a small wedge followed, and the day ended in a strong position near the highs of the day. Can demand remain strong enough for a breakout through the top of the channel? Possibly. But it may then quickly run out of bullish momentum. However, it will depend on whether it occurs before a minor pullback or not.

Slingshot Setup

The initial decline yesterday that occurred before a sharp rally was a clue that bullish momentum could accelerate. There was a confluence of several indicators around that price area, including the 50-Day MA, 20-Day MA, and 50% retracement. When multiple indicators point to a similar price it tends to be significant.

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