X is, once again, approaching resistance. This base has been building for almost 15 years, so when it does finally go, it should give a nice long. I've outlined the 'potential' waves that should form based on measured move and targets. From a traditional technical analysis perspective we are looking to execute the outside return based on the concept of polarity. In this case, the resistance that has held for 15 years'ish will now become support when price blows thru and comes back down to this former level. Hence, the name "outside return."
Additionally, I've outlined an area where this gameplan is wrong and it's time to stop out. Note, that's a wide stop, but at the same time we have a target that's some distance away. I've calculated this opportunity at 5:1.
When executing the 'outside return' this has been my experience:
A LOT of the time, once a security breaks thru (up or down) a long term base of either support or resistance, it will come back one last time and "kiss it" for the outside return. You can count on it ...
However, sometimes, it's just too easy to 'run the stops' and they will go down/up to grab some stops who 'bought the breakout' and the 'classic' outside return might go a little deeper than expected.
Last, this is how I will be looking to play this opportunity. No reason you can't buy the breakout, sell the first top and use all that to risk to go long on the outside return? Sure ... but, that's 1/ giving me a LOT of credit that this WILL happen and 2/ from Mark Douglas "Trading In the Zone" - every market moment is unique. This entire post could be for naught and it either falls from the sky tomorrow down into the low single digits or gaps up on some tariff news and it's GONE. We have no idea ...
