Monthly chart first.
My ten mile high long term view in order to see the big picture of where we have been and what direction has been taken in the recent past. Clearly there has been major sell offs (down arrows) with highly volatile buying which has historically been sold into over and over again since the crash in 2008.
Given this is all historic it is useful to look for where no further down side came in, indicating a protected price level. We see such an area on the first up arrow. This was a retest of the lowest price to its left in February 2010. Getting closer to today's price there has been a retest of the first up arrow bullish break and a fast (or relatively fast given the time frame) retest where I have arrowed a bullish candle to the right of the box. This is showing bullish strength and there can be no doubt the bulls are in control and looking to break the bearish sentiment in this market, why else would pro money buy so strongly with supply close over head. All this is simple logic. On the last up arrow there is yet more bullush pressure which was sufficient to break supply and price is now at the horizontal line. There is supply from here to where I have a candle marked with an x.
One benefit in favor of the bulls is this candle was quickly spike on the way down and there will not be as many pending orders waiting when price returns. This will greatly aid price to rise with less resistance from sellers.
Weekly chart.
I zoomed out a little here to aid clarity. The placement of thex cable and box are original and I have some up arrows for more recent price action. Take note of how price has used the box for a support area below and on top. This is proof of bullish intent all the way back up. Something new shows up in the time frame, see how the horizontal line now shows a spike on last weeks candle?...good news for the bulls yet again because its taken some of the selling pressure out of the market and with less sellers and bulls still looking strong we are setting up nicely for longs. Give today is a holiday the move is unlikely to happen today. Looming over head is the x candle and watching how price reacts when that gets hit will be very telling.
As you will know by now, if you take this too far down in time the price action gets noisey and the false moves will be account killing. Let the herd get pushed around until pro money takes it and then follow. There is still room for a false move down on this given some obvious buying that has not been retested and may or may not be tested. The pro's will do what they please, when the please and there is no particular movement favored by them.
Daily chart.
Last of the most reasonable looking price action of late on this pair. The lower box is just visible and again you can see how price has used that area. The major buying is marked with up arrows and at the time would have looked bearish. On the top of the chart I marked up two candles where false breaks resulted in trapped longs, when these price get hit they will stall bullish progress for a time and this has to be absorbed by the bulls and choppy price action will be the norm at that stage.
Over on the right of the chart is another box. This has so far acting as a support area for price and its been touched numerous times and not broken. This area is just under two two false breaks where bearish activity had taken place and the most recent spike has not driven price down very much at all. Today may work against the bulls with the holiday and nothing to support the price. If we fall back there is a potential 150 points of down side. Anymore than that and it will be a deep retracement or turn into another small leg down. Getting up and out of where we are would be a clear sign of a bullish year to come because its where all the best profit lay.
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