Monday, August 31, 2009

Interesting Day...

So we saw the short setup play today. Not surprising to me considering the technicals I observed this weekend and the catalyst (China selloff). I think if it were not for the M&A activity and positive ISM numbers, we would have seen more of a selloff.

My short setup was based on a break below 1023 and a test at 1018 - we got that and I was able to profit from the short position that I carried in from the Friday session. I then suggested that a downside breakdown from 1018 could easily drive price to 1007. My assumption was based on the fact that the gap from 1018 to 1015 was filled in a prior session and the remaining "price garvity band" was relatively thin. Well, it seems we can not underestimate the supportive properties of a previously filled gap! It provided a lot of support in this zone and "captured" the price action firmly for most of the session. I do not put much significance on the final hour today.

I started a new short line at the bottom of the gap. At first glance, you might think it to be the worst entry - I agree, but I am also comfotable with the position as I think we are going to see some correction/consolidation going forward.

I will analyze and post new setups tonight.

Hope everyone did well today!

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