We officially have a downtrend. The downtrend was set when we closed below 1041 today. Well below I might add. We now have to look for support - as markets do not travel in one direction forever. Open the hourly chart:
Note that we broke out of the bottom trendline near 1048. We saw a slight pullback (which I warned to expect) and then strong continuation bar heading south. If you shorted below 1048 and held on, you would have a very nice gain. Notice how the price moved nicely through 1041? Remeber, one you full retrace a rally leg with the kind of price momentum we are carrying - there is no stopping the train.
The analysis called for support at 1036 (the 50% retracement of the main rally that started on the 4th and ended on the 23rd) - which you can see in the form of price indecision across the final 4 bars. This is a major pivot point - if we were going to reverse today - it would have been here. This goes back to yesterdays post regarding the importance of the 50% retracement of price waves.
Once we broke 1036, there is no support until we reach the intersection of the bottom trend line and the 62% retracement level of the main rally. This is right around 1025. I expect to see a bounce there and it will be the spot (roughly) that I plan to add insurance in the form of October calls.
If we break that trend line - I think 993 is a fair target short term. If we bounce off that trend line we will see a retest of the 1036, 1041, and 1047 resistance.
I hope everyone has profits from the volatility!
Good luck.
2 comments:
very marginal profits today after several good days. I wish I had kept a larger position; I tried to hedge and it didn't work out all that well. I will likely wait on the sidelines until we get a bump, because I don't want to chase. I do think that we are going down, however.
Hey KPH,
Sorry to here you missed the trade today. I'm going to stick with the technicals for now - I think we'll see a bump as the bottom trendline is near - but we are in a downtrend now so until we get a close above 1041 - I am not going to consider a long swing...
Good luck.
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