Longterm Arbitrum Plan, could this set us up for new Highs?
2024-12-12
Category: None

Alright, let’s break down the Abiturm situation:

We’ve completed a large, overarching red structure, which allowed us to identify an entry for an orange structure. The issue here—and honestly, something I don’t like—is that there wasn’t a proper retracement into an XY-level of the red structure. The orange structure essentially starts in the middle of nowhere.

What’s also a bit concerning is that the resulting green structure, which is subordinate to the orange, couldn’t hit its Z-levels either. Instead, the market reversed every time it hit resistance levels. Even though the green XY-level was reached, the market held its ground and used a so-called range spike to initiate a sharp move upward, blasting through the XY-level of the orange structure.

However, it’s important to note that we haven’t invalidated the orange structure. This means the market theoretically still has the legitimacy to continue extending downward.

We also need to note that we now have the potential to activate a blue structure here. This means we first need to move into the reversal zone and then strike the activation zone, marked by the blue line.

The challenge—or rather, the factor to watch—is the presence of a purple level along the way. This is the so-called retracement level. It’s highly possible that this level either pushes the market downward now or acts as an obstacle later in the move.

Here’s how I personally plan to handle the situation:

I’d place a marker and an alert at the current swing low, which is just above the blue reversal zone. As long as that alert isn’t triggered, I’ll trade the purple level. However, if the alert is triggered and we create a lower low that moves into the blue reversal zone, I’ll disregard the purple structure entirely and stop trading it.

At that point, the likelihood of extending further upward becomes very high, as it would invalidate the orange structure. What I could see happening is a smaller correction at the resistance line. This time, though, unlike in previous cases, the invalidation of the orange structure is quite far from the resistance line.

So honestly, I wouldn’t be surprised if we don’t even pay much attention to it and move straight into the target levels.