We can see how the period between October to December 2018 was the original bottoming of this chart. But it was complicated. At first glance, it’s an easy tell: volume surged the lower shadows tell us that the bulls were starting to come into the trade.
The complication was the large bearish engulfing candlestick at the beginning of December, which cast doubt on the whole bullish movement, which was starting to take place. Our suspicion is warranted, as price does reverse back to the downside, and briefly falls to lower lows. Scary if you had bought into the bullish storyline.
When would we have started to see a bullish movement begin to take place? For me, it would have been the initial break of the mini-resistance, the high the original bearish engulfing candlestick.
And even though we see the breakout of this resistance, the confidence of the breakout is worrisome. Also, the breakout was on a bullish candlestick, the sizeable upper shadow suggesting a weak follow-through – not something we want to see on a breakout!