OK, now I can see the wider view, I am not so keen on being long right now.....not at all.
It just goes to show how different a one hour chart can be, to the larger timeframes.
That is not to say the one hour chart is wrong. It is just that it will likely be overwhelmed by the longer time frames, which are always much stronger. So any push higher will find it difficult, for sure.
There is little doubt (to me) that the announcement (or whatever it was) in mid/late August was used as a liquidity event for some holders, and following that, there was ongoing supply coming in (a period of distribution).
So then without the price being strongly defended anymore, price broke down and started gapping lower, eventually down to the lows of the initial spike higher.
Now, just to step back a bit before I go on..
If those two widespread high volume bars were true 'breakout bars', and I was looking to get into this stock, I would like the period of consolidation to be done no lower than 50% of the breakout spike, as I feel this shows strength (and if the consolidation is less than 50%, then all the better, it just illustrates how strong the underlying sentiment is).
Note - whenever price makes substantial gains, it will inevitably draw out supply (usually profit taking from below, or from the left (and perhaps some new short positions as well)). And after the initial spike higher, a period of consolidation will be required, where this increased supply is absorbed. When this is done in a 'normal' manner, the spike higher and subsequent period of consolidation will form a bull flag pattern (in whatever timeframe you are looking at).
OK, back on track - if the majority of the consolidation is done at the 50% level or higher, but there is a just brief spike lower, maybe forming a shakeout of some kind. Then the drop below 50% can be pretty much ignored. This is why 'hard and fast' rules make things difficult, and why being flexible in your thinking is so important.
The lows of the spike higher are usually a good 'line in the sand' for determining where price will fail and show weakness.
If price even comes down to the lows, then at the very least - so much supply is being drawn out, that it is over whelming demand, leaving price very vulnerable to complete failure.
It can however recover and still do OK from the lows, but the amount of stocks that recover from here and do well is certainly reduced.
If the lows of the spike higher are clearly broken, then price will 'rarely' be able to hold on, as so many new positions that were bought on the spike higher and subsequent attempted consolidation, will be being sold off.
Which just adds to the ongoing supply issues, and creates a domino effect lower, and subsequent 'negative influence' forming a new down trend.
This stock has obviously had supply issues, as price is currently dancing around the lows of the spike higher, making a decent attempt to 'hold on'. And it might still be successful....I don't know ??
But just the fact that price has come all the way down to the lows, sucks away all my confidence for anything but perhaps a day trade, certainly not a (long) swing trade.
Finally, if you must trade this long.
A clear break above the highs of the last widespread downbar (solid arrows) would suggest some 'intent' to (briefly ??) carry it higher.
From there you can look for profit targets at the horizontal arrows, with the heavier horizontal arrow at ~20 being the beginning of the more serious resistance zone. But really, going long would be a counter trend trade now, carrying higher risk of failure. Surely there are easier trading opportunities around, and this can be left for the true believers.
And if anyone wants to know where I would take a longer term 'long' trade.
It would be either following an obvious 'buying event', similar in size to the supply event already seen, or after a successful push back above the distribution zone @~22.00, preferably on a test of the breakout.
(20min delay)
