Though this consolidation is more like a triangle, so it seems more likely to break up with a target of around $1120 before breaking back down
Interesting to hear this from you. Regarding this triangle, what gives you the impression of a bullish bias?
First things first...
Why would you phrase this like this? Do I come off as a permabear? Because I assure you I am not. I am just objective in my analysis. A realist, if you will.
On to my reasoning...
Because there is a slightly bullish feel amongst (what I believe to be) a greater bearish mid-term, I do believe it is more likely to rise out of the triangle. While there is the possibility to break down (shown in fig.1) there are other reasons to break up (the rest)
Fig.1Illustrated here, you have two outcomes. One where a typical 4th wave triangle (EM, I don't want to hear any shit
) pattern breaks up, and out, (labeled in cyan) and is the whole consolidation for wave-4. The other would be a larger ABC where the triangle is the B-wave (labeled in red).
The target I mentioned is only an estimate using the height of the a-wave of the triangle. This is a typical target for triangles, though it can fall short and it can rise above it, but it gives you an idea where to look for exit points. Even with this uncertainty, you have clear stop points if it goes against your trade. Since nothing is perfect in EW or TA, having well defined stops are a great way to minimize risk. You would set a stop-sell just below the lower trend line, or a stop buy above the upper trend line.
Enough about the usage.
This all plays into a larger picture that is a real possibility. The chance of a larger 4th wave triangle on the Daily-Weekly time frame (fig.2). A breakout would complete the triangle B-wave before reversing back down in the C.
Fig.2