Back with Black
Made a quick trip home and, among other things, brought back copies of my black templates for the blog. Now all I miss is my multi-monitor setup and being able to trade during the day. Just a quick look this evening, but the market is still keeping time in a Fibonacci rhythm.
We popped through yesterday’s high and reversed right at the 162% external retracement of yesterday’s initial move down (best seen on a 15 minute chart.) Remember that most failures that form reversals seem to come at or between 127% and 162% of the previous decline. Once we get beyond the 162% level, the move usually continues.
I prefer reversals at the closer 127% Fib level, but stay cautious until we pass 162%, and today we didn’t continue. The move back down through yesterday’s high created a failed Test of Top, and we pulled back 50% of the up move. After that failure I would pass the pullback, but would probable have made my first trade at the 62% retracement at 8:30 (Pacific time) with a short sale.
Several reasons for a short at that point: first the 62% pullback goes right to yesterday’s high — a normal resistance point. Second, look at the lack of speed in the rally. If you compare the speed of the morning drop with the slow retracement, a loss of momentum is obvious. A shorter term oscillator also shows a divergence there — another indication of poor momentum.
Of course today’s lack of range means that you need almost perfect timing to make any money. Each of the declines reversed at the 127% external retracement, with a smaller range for each move. Not exactly a good trading environment.
I still think this is a longer timeframe top (see previous post) until we exceed the 839.60 high we made on April 26th. But once again, that is only a working thesis, and makes little difference to a daytrader.
