Here’s my hypothesis: The Euro zone news isn’t good, but on the other the market has dropped over 50 pts. That’s a lot. I wouldn’t be surprised if we get a bounce and possibly even fill the gap. We can’t know how much of today’s selling was rumor/news driven due to Ireland. The governments are going to tell us everything is fine and we shouldn’t worry, and then the bulls will be scooping up the bargains like an Abercrombie shirt on the Ross clearance rack. We’ll see if it plays out. We got a nice flush today but the absense of professional buying at the lows concerns me. There are some pro bars on lower timeframes but that’s cheating..
Yesterday about 1 hour before the cash close I went long with avg cost of 74. 50. Overnight it tested 80 and turned back down, all the way to my entry. I was kicking myself for not having set targets just under 80 which was a LVN on yesterday’s profile. So when it went back up I didn’t fool around and scaled 75% of my position at 78.50-79.50. I’m holding 25% to see if we break above 80. If we do I think there is more upside potential, with a gap fill at 94.75 which is my main target. A retest of the lows is always a possibility.
It’s really important to form hypotheses. They don’t always pan out like this one did, but that’s what a favorable reward:risk ratio is for.
Levels I’m watching today are 80, 84, & 94.75. I’ll scale out at the latter two. Good trading to you today.