On the daily chart we identify an upward channel in which price has been trading between for the past 130 days. The decisive break below the channel was due to the April 2025 tariff announcements which effected many different markets across the world. At the moment, the current trend is upward with price continuing to trade within this channel.
Zooming down into the 1 hour, we see a failed head and shoulder reversal pattern. The neckline was broken and prices were heading downward but ultimately were stopped by the bottom channel trendline, reinforcing the bottom channel trendline as support. Prices then rallied back upward and caused the reversal pattern to fail.
Notice the RSI and how it differs from price when the neckline was broken. At the point where price touched the downward trendline, the RSI did not create a new low. Yet the moment before price reached the downward trendline, prices have dropped considerably. This means that there is very little momentum behind these price movements, but this little momentum was enough to send prices downward a decent amount. In short, there is little interest in purchasing the security at this time, the demand is low. One would expect prices to continue falling at this point, but instead prices begin to rise. There are many reasons why this could happen, one of them may be that institutions and banks are intentionally supporting price and keeping it from falling below a certain point.
This can be seen clearly in later price action. When price falls back to the bottom of the channel, prices rally quickly on volume that is declining. Normally, volume increases when prices go up. When that doesn't happen, it's important to look out for. A possible conclusion for this misalignment is that institutions and banks are keeping price within this channel for one reason or another. This aligns with the analysis performed on the daily chart which shows price trading within this channel for an extended period and continuing to do so. At this point, the most profitable decision is to place a trade on either end of the channel until a decisive break has occurred, retested the channel, and then broken away from it.
Here is the trade I would take, placing the stop loss below the most recent low and a take profit at the other end of the trendline. This gives a risk to reward of 1 to 2.33 which is an excellent amount.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.