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Looking at the H1 chart, we could see that the price which was moving lower has created a bullish divergence that has formed between the first low that has formed at 1622.46 and the second low that has formed at 1617.19 based on the MACD indicator. The price then moved higher and broke above the last high at 1645.70 creating higher highs, thus forming a classical setup of bullish divergence followed by bullish convergence. Hence as per the book scenario, after a bullish convergence, we may look for corrections to happen and then further continuation to the upside. Currently, it looks like a correction is happening. Also, the price which is currently moving lower has created a bullish hidden divergence that has formed between the first low that has formed at 1617.19 and the second low that has formed at 1643.98 based on the MACD indicator we may consider these as evidences of bullish pressure. Also, based on the Stochastic Oscillator, we could see that the price has reached its extreme which we may consider as yet another evidence of bullish pressure. So everything looks good here for the bulls and until the two strong support zones (marked in blue) shown in the image below hold my short term view remains bullish here.
It is always recommended to look for confirmations before you jump into any trade. If you are not sure about how to trade this short term buy setup then you can use any setup and strategy that you have in your arsenal to look for bullish moves and join this buy trade.
Also, don’t forget to protect your buy trade using a stop loss and make sure to set a target and keep a proper risk/reward ratio.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team
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