Good morning traders!
Hands up to those who were smashed to pieces yesterday? [Me] When you consider that we have been trapped in a small-ish range for the last few days, you could be forgiven for having a short trade with a stop loss above the highs and/or a long trade with stop loss below the lows. If this was the case, then it’s likely you were taken out today.
Despite the bearish chatter on social media and various blogs, I still firmly believe that unless we take out the levels discussed in yesterday’s article, then we are bullish. We will likely have an opportunity to buy at lower levels and the move yesterday fitted nicely with my bearish setup from the four hour chart.
Looking at the longer terms charts, I am wondering whether this may turn out to be a bear trap because if you look at the bigger picture we are in a largely bullish market, have experienced a 10% correction which historically is where buying is common place, we still have strong fundamentals to support further growth so we can move higher. Greece reports in the news fuel the volatility, but we’ve known about this for nearly 12 months, it’s nothing new. Plus it’s the month end and salaries are being paid meaning pension contributions are being made, meaning more money to invest for the pension funds, meaning shares are being bought by pension funds.
We touched the top of the range suggested yesterday and immediately reversed, so anyone taking a long trade at that point would have been stopped out, win some lose some, these things happen. Shorting from there was profitable but I did not take any shorts.
If the short term bearish momentum continues then 11500 could be interesting and I might consider a long position from there. If the 11575 holds and we stay above that, then I think we could look to build from there.[twitter-follow username=”DaxTrader54″ scheme=”light”]
I closed out a few positions today, which have created a decent buffer for me but I am taking a beating on my current open positions! I haven’t had much opportunity to trade today, so haven’t paid much attention to the signals I have been receiving, but feel free to look at them for yourself here.