Tough call today!
On one hand I should exit this long trade because we closed below the 8ema. Actually I should have exited yesterday for the same reason.
But price action likes to retrace less than 100% of the previous move, then continue in the original direction, and you have to make allowances for that natural behavior. For today's candle, notice the calculations shown on the bottom of the chart. It shows today's low was 75.2% retracement of the recent up move, and today's close is 62.8% (very close to 61.8% Fib ratio) retracement. If this is the extent of the retracement, and we start back north in tomorrow's session we'll probably close above the 8ema, and start to form a possible Inverted Head & Shoulders pattern.
If you look at the first post in this thread (https://jmstweets.blogspot.com/2020/05/july-wheat-got-in-my-face.html) you'll notice on the chart we're making a double bottom. If we make an Inverted Head & Shoulders and break up through the neckline, as part of a double bottom, we could have a sizable move to the upside.
Plus we gapped up at the open of today's candle, and continued higher before we rejected off the 20sma and reversed lower. So maybe what we're seeing is the result of profit taking. If that's true then we didn't have an actual change of sentiment.
July Corn, Soybeans, and Soybean Oil, could be described as bullish. This adds to the odds Wheat could turn bullish, in my opinion.
To be frank, while everything I said above is true, it comes from my aversion to taking the loss by exiting here. If price closes lower tomorrow, the loss will be worse, and I'll be sorry I didn't follow my exit rule today. But if I got out and took the loss, then have to re-enter at a higher price tomorrow due to big move back up before I wake up, my profits in the end, if any, will be less. I'm not sure whether I'm having a self-discipline problem or I'm making a wise decision to waive the rules in this specific case.
Tough call today!
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