XBT/USD is again in a congestion, i’ve already spoken many times about how to measure a congestion in previous udpates but remembering the Romans saying: repetita iuvant (repeating does good) i decided to repeat again the whole concept of price congestion.
Congestion occurs when four consecutive bars open or close within the range of a “measuring bar”. A “measuring bar” becomes such when its price range contains the opens or closes of at least three of four subsequent price bars. Price movement may be broken into three distinct and definable areas:
- Ledges – less than 10 price bars
- Congestions – 11-20 price bars
- Trading Ranges – 21 bars or more with a breakout usually occurring before the thirtieth bar
Now 20 days are gone without a breakout above or below the “measuring bar” (i consider the measuring bar the one of last 30 June) and we are in a congestion and close to become a trading range. The reported channel upper and lower price level is very similar to our measuring bar, from $595 to $640, I expect a breakout above or below these 2 levels within the next ten days because on average a congestion phase for this market never lasted more then thirty days.
I’d be very surprised to see the price still inside this trading range in August, IMO the odds are for a breakout above $640 considering the underlying trend which is pushing up.