Ugly enough for ya? Yesterday's post said we might have a "3 drive to a top" pattern, and if we do we can expect a 50% or 61.8% pull back. I drew in yellow Fibs from the high to the bottom of the current up swing. You can see we hit the 50% retracement exactly.
The close below the 8ema should be handled by watching the chart at the open tomorrow. If we start down again, we should get out and look for a place to get back in. However, the top candles do not make a sell pattern. And today's candle is relatively large. You can see in the recent past, big candles are faded the next day. If I knew today's action yesterday I would have sold and looked to get back in, but there was a good chance we could have continued up today, and I didn't know what would happen, so I had to stay in. I'm still in.
Tomorrow we could see a reversal back up with the trend, or we could continue down and hit the 61.8% Fib then reverse back up, or worst case is continue all the way down and hit my stop at 517, which is 2 points over my entry at 515. If I get stopped out I'll watch for a re-entry opportunity.
I'll admit it was painful to watch $1,000 evaporate today, but I still believe in this pattern, and until another day closes under the 8ema, I don't think its been invalidated. Just have to trade what the market gives us tomorrow.
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