NGH-30min-2-16-2021-10-03-pm
NGH - bulls may save a bullish setup if this pullback follows a triangle pattern
First I want to note that subwave (c) of wave ( iii ) up topped at 223.6% ext of wave ( i ) up.
That 223.6% ext is the most solid fib that very often stops wave ( iii ) either up or down.
Second, I normally look for subwave (c) of wave ( iii ) to top at 123.6 % ext of subwave ( a ) of wave ( iii ).
But quite often I see that subwave (c) of wave ( iii ) stretching to 138.2% ext of subwave ( a ) of wave ( iii ). That was the case today.
As I noted in the morning the depth and micro structure of the decline that followed wave ( iii ) was a red flag for bears. that quick drop lacked a-b-c structure and retraced 61.8% of the preceding rally in wave ( iii ) up.
The only scenario how NGH21 can produce another push higher in wave ( v ) up would be a corrective wave ( iv ) down shaped as a triangle. In a triangle shaped correction the first decline is the strongest.
The triangle is composed of five subwaves labelled as a, b, c ,d, and e.
In the most common form of a triangle, the symmetrical triangle, those subwaves bounce in between two converging trend lines and that makes every new successive wave to be shorter than the preceding one.
For example, the bounce off the morning low is shorter that the preceding decline.
At this point it is too early to confidently conclude that we deal with a triangle.
On the chart below you can see how a triangle could look like here:
From a trading perspective if we keep seeing NGH bouncing in a narrowing range that would make it an attractive log setup for a push higher in wave ( v ) u targeting 3.320-3.370.
However, if NGH21 drops under the morning lo made at 3.012 I would take all bullish bets off.
NGH 30 min chart updated at 10-00 PM on 2-16-2021
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