I've been waiting on Mar Wheat to hit my 554 1/2 buy stop for days. Now that its popping up I want to double check my entry level and see if I want to adjust it.
The chart shows a thick white vertical line representing the recent down leg. Where would an entry be that gives good odds this will be a break out rather than a temporary retracement followed by resuming the down trend? 50% retracement is pretty standard and I'd say it doesn't give us an edge. I'd have to say the same about 61.8%. 78.6% is less common but still not enough to be convincing. So something above the 78.6% (553 1/4) might be a reasonable retracement to get back in. Really, the best is over the top of the swing (557 1/4). Just so happens by coincidence my original buy stop at 554 1/2 is just over the 78.6% level (553 1/4). I originally got that level because it was just over the high of the first candle to close below the 3ema. So, I'm going to be a little aggressive and keep that buy stop.
Today's (12/26/19) move already took out the 50% and 61.8% levels. And it was with decent volume even though we're in the holiday period, which seems bullish. So, even though I'm giving up a couple points waiting for the 78.6% level to be breached, its worth it for the added probability this is a break out move and we're back on track to reach the 61.8% extension of the yellow range (573 1/4).
However, we didn't hit the 50% retracement of the recent up leg (purple range), nor did we fill in the gap at 534 3/4 - 533. So I'm still not convinced yet this isn't just a retracement before more downside.
Bottom line, currently have a live order with a 554 1/2 buy stop and a 573 target.
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