Good confirmation today I made the right decision to take the loss on the long position and go short. Unrealized gains are roughly equal to the loss at the 14:20 ET close already.
Today's candle combined with yesterday's candle form a Bearish Engulfing pattern. Same is true for the 2 candles before those. And we closed well below the 8ema. This is the good news for our short.
Today we closed right on the 50 daily SMA. This moving average can provide support with the effect of price rising from here. However, we did close near the bottom of today's range, which is encouraging for a bearish position. We also closed under a previous long term trend line. And after some congestion around the neckline of the purple colored Head & Shoulders, we closed under that as well, which is bearish.
I'm concerned about bouncing too far off the 50sma, but you can see we already bounced off the 50sma on 2/3/20. Since we already paid our respects to the 50sma, we can now slice right through it. In case this sounds crazy, I've seen this many, many times. Where price will initially respect a major moving average by bouncing off it, but then come back to retest it. And the retest fails with price punching right through the moving average. That's what I'm counting on this time.
If we bounce off the 50sma and close above the 8ema, we may have a problem. Of course, I'm holding the short position and waiting to see what happens next.
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