July Wheat Got In My Face Update 7

This was a very difficult decision! The 2 candles before today rejected off the Inverted Head & Shoulders neckline and formed a bearish Harami pattern. Now today's candle confirmed the sell signal and closed below the 8ema. Rules say exit the long position and look for an opportunity to go short. The position ended the day down about $300 but that's only half the possible loss. If it wasn't for some mitigating factors I definitely would have sold the option. If you've been following this blog you've seen me do it many times and I would definitely do it again.

However, notice today's sharp price move stopped right on the intersection of 2 Trend Lines. One is angled downward and the other started 5/18/20 and is angled upward. This demonstrates support right at today's low and preserved the Triangle pattern.

Also, notice the price action since 5/18/20 has been snaking around the 8ema. Some candles close above and some close below. We're forming a triangle pattern and we're getting very close to the breakout point. Unfortunately, at this point we don't know which way we'll break. But we do have all the original bullish reasons we entered this trade in the first place, which suggests we'll break to the upside.

Do you risk angering the trading gods by ignoring our rules yet once again, or do you recognize, given the current specific situation, there's a reasonable chance we're still just respecting the neckline, and now that we hit support, we'll bounce back up before the end of the day tomorrow?

Another consideration, in my opinion, is that once we've broken out of this triangle consolidation we should have a big move in that direction, possibly after a retest of the triangle trend lines. If so, the big move should more than make up for a loss, if we break to the downside.

So, risking the wrath of you know who, I decided to make another exception to the rules, and hold the position.

P.S. The reason I can break the rules is because I understand why they were made, since I'm the one who made them. That's not to say its ok to break the rules because you're the one who made them, I'm saying because you understand the assumptions behind the rules, and the trading situations that gave rise to the rules, you're in a position to recognize when they should be given less weight than usual.