There is definately a current downtrend on the instrument on the t/f shown (I assume both charts posted are the same t/f) ...price has reached an area where a fractal swing low (not yet formed) would constitute a LL after a LH.
Looking at the bigger picture screenshot - (2years and assuming it is the same t/f) the previous fractal swing hi (= previous resistance = potential RBS) zone circled in black would show up as such on the next higher t/f although it is unlikely that the one circled in red would.
There are 2 pertinent things to note about this potential RBS, they are
a. The previous fractal swing highs are ' non-immediate,' ie they do not form part of an upswing ie a previous swiwng hi in a n upswing/trend that may act as potential RBS if tested in a pullback from the topside.
b. As stated above really only the previous swing hi furthest to the left of the chart would show as fractal swing on the higher t/f.
These 2 factors affect the likelhood over any given sample of such a previous point of resistance acting as potential support....In looking to go long from there it would be an outright reversal of the present downtrend on that t/f...and in so doing the question should be whether it is a pulklback in the next higher t/f up trend, which looks like it may not be given the consolidation and downside break that has occurred (shown by the 2 lines on the chart above.)
In going long I would be looking for further potential support factors at point d, possibly a fib of move Z-X or Y-X and be looking for regular divergence or oscillator extremes at this level with a very good 'reversal candle or combination therefore suggesting that the upside (howsoever temporary) would be the most likely play from there....ie bounce not break, and this on the t/f below thos one or even on t/f below that that t/f immediately below that shown also having such a supporting set-up develop. Ie In entering long 2 t/f's below that shown I would look to see how the candles closed on the successive t/f's above as to whether price action was confirming such a move higher was more probable.
Should no such set-up present itself or even if it did I would still plot a fib from point f - d and from point g (the LH marked on the 3mth picture) to same point d and be looking for a confluence of reasons to get short again with a hidden divergence set-up on the t/f below this one, suggesting that the rally from point d is a pullback in that t/f's downtrend and that the short trend on this t/f may continue.
G/L
