The Third Direction
I ended the last post saying that I’d be willing to take a trade in either direction, but neglected to mention the third posibility — sideways again. Perhaps all that excitement yesterday was just short covering after all.
We started the morning with a small gap, and went right to what is often a turning point — the 127% external retracement of the last move. This also created a Spring setup when price couldn’t hold the breakout above yesterday’s high.
An overbought Stochastic combined with a slight divergence gave the short entry, but there was not much continuation as we formed an A-B-C ending at the 62% Fibonacci level.
The combination of a narrow range during the first hour and criss-crossing moving averages kept me out of any additional trades. As sometimes happens, the market started oscillating around the center point of the day’s first move, and ended up almost exactly at yesterday’s close.
