Past Review
Well what happened here. After hitting the 857 range again I was confident of a break lower and instead we had a straight line to the top. This up rally had occured on very low volume on as volume stepped in I was sure of a break down on every peak - as you can imagine I kept on trying to short without luck - thats a perfect example of why waiting for a confirmation is a better trade many times. Friday was topped off on much stronger volume and a final break of the 918-920 range. I have to admit I was quite shocked to see this occuring, we had no retracements of any kind on the run up - something I had not see this drastic before, considering we moved almost 100 points up without a single break down.
Today
We have run too fast too soon, all indicators are heavily overbought however this did not prevent hte market from rallying on Friday. We have broken the 918 range now which should represent a bit of support now on the way down. I would expect a small retracement now that many traders have returned.
How to trade this?
Well this is going to be a bit more difficult, one would say the short is the best bet here but I would be cautious. We are heavily overbought so I would expect a pull back however waiting for confirmation is the best option. If we break down below 910 we should reattempt the 885 range, on the other hand we have a chance to continue on the upside from here and remain in a more sideways condition.
Considering its the "first" day back at the markets for many I would wait it out today to see what is going to happen and what traders will do with the extra 100 points they got.
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