In the last update price was consolidating up against the channel trend line. I couldn't see an edge to either break out to upside or break down back into the down channel. So I just monitored HE April futures until there was a tip in the balance.
Jan. 3rd there was a doji gap down with further downward price action and closed below the 8ema, and with good volume. The doji gap down pattern is a strong bearish signal. But by the time I first saw the chart a big move was already made. The candle closed on the 50% Fib, so there was a reasonable chance we'd get a bounce back up on the next trading day. So I decided to wait and see how the market opened after the weekend.
When it looked like we were getting a continuation I got a April .75 Put option for 5.90. I have a target when HE futures hits 71, which is at the end point of the AB=CD projection. There is more room after that down to 70 which is a nice round number at the bottom of the previous Head & Shoulders (yellow thick lines), another possible target, and also down to the bottom of the channel at the 161.8% Fib extension of the yellow range around 67.60.
Also have a Stop Loss when HE April futures hit 77.50. Today we hit the 61.8% Fib retracement of the yellow range (78.825-71.90). There's a chance we bounce off of that level, at least for a while. But while I want to have a Stop Loss, I'm not that concerned about the 61.8% Fib because of the strong sell signal and stochastics are in the mid-range with more room to go before being oversold.
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