To be clear, I think this is inevitable and we will break, but will that be TOMORROW or IN TWO MONTHS?
I think this consolidation pattern will give us our first strong clue.
We made an attack at 5000 in the last 24 hours and we were rejected. No surprise there, as that was our first time seeing those levels since the rally to all time highs back in late August / early September. We've made a pretty extended run from 3000 after pulling back, and things feel a bit stretched.
CONSOLIDATION = HEALTHY
I would like to see some healthy consolidation here, even for a few days, before a breakout. But if we do consolidate here too long without a breakout, then I think we'll see a pullback to 4500 / 4000 level at least, which would predict another few weeks or months without a break of 5000.
So the I've drawn here gives us our first clue. If we break to the upside, I think we'll break 5000 quick (then I hope we can hold it). But if we break to the downside, we probably have a few more days of consolidation or even a pullback before the break.
BEST CASE FOR A GOOD TRADER
I would love to see a violent pullback, quick and dirty that knocks out a lot of the people who are just getting in for the break. That shakes out the weak hands and then buyers will come in for a new burst without any sellers to be seen. Those quick shake out reversal patterns, where a low is taken out, and then recovered quickly are the strongest signals.
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