NKE 1/3/20224HR chart analysis
Price has been in a descending triangle with multiple tops. On 12/14/21, price breaks down creating shorting play. Price suddenly reverses and makes a sharp move back into the descending triangle. Here we have our 1st Price rejection of lower prices making the initial breakdown from descending triangle a “false” breakdown. From here, price makes another attempt at the Resisting trendline but fails and makes another “lower high”. Price then follows to breakdown once again and falls below support. Currently, price is sitting close to the 200ema looking to reject lower prices and bounce back up into support for the second time.
Analyzing this chart, we can see there is a lot of seller action within this descending triangle. We have 5 tops forming a series of lower highs and we also have 2 breakdowns of the descending triangle. These are all areas where sellers took a position to short.
The buyers however have flashed their strength. When price broke down the 1st time, they were able to buy up the lower prices and bring it back into Support of the descending triangle. This made the initial breakdown a “false” breakdown as price went back into consolidation within descending pattern.
There should be no open trades going long right now. Price has broken down from descending triangle support creating another shorting opportunity. However, if price rejects lower prices for second time and bounces back into support, then this is a MUST buy. Buyers would show further strength creating higher lows with the 2nd price rejections. If the buyers can use this strength to break up and out of descending triangle, it will create massive buyer pressure due to all the previous seller activity within this descending triangle. A lot of seller stop-losses and exits will catapult the price.
If price bounces back into area of value @ Support, the long trade “risk to reward” wise makes this a no brainer trade.
Entry: Buy order @ $167. Area of Value
Stoploss: $162.50(-2.69%)
Target exit: TBD
