Yesterday
Yet again another strong range day however there was not much that was easily tradable. Sideways action after a big gap down, indecisions around support and resistance points and an attempt at the 850 that fell short at yesterdays top. While we sold off we closed slightly above the gap open. I would not consider yesterdays action a proper fill off the gap as we closed below the previous open but it was another attempt at key resistance.
I had mentioned that the market needs to reattempt the 850 range before it can properly break down further, something that I feel will occur in the short term.
Today
We have friday today and as always weekends carry a lot of risk for us and many other traders feel the same way. We have to watch action carefully in the last hour of today - a rally even if its below the 850 will confirm that we will get our retest next week. A sell off will give us confirmation for retesting the november lows. I do not feel we will see a 850 test today but we have been trading rather sideways the past few days. The market is either trying to create a base here or absorb buying pressure to drop further.
You can clearly see that the market is preventing the big breakdown to come as a break of the 800 will lead us to new lows. While there is one last chance at a double bottom I feel it will be too late.
How to trade this?
Today is probably best spent again on the sidelines - yes we have wide ranges but no current trend - we need to get out of our sideways action and continue either on the upside or downside. If we are to reach the 850 between 11:30-12:30 we have a great trade on the short side. If we get to the 850 in the late afternoon after 2:30 I would avoid this short trade as you may have to carry it over the weekend to get your exit.
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