Price drifted down enough today to trigger our Sell Stop at 2206. The low was 2201.50. Our order was filled at 2205.60 at 10:11am ET.
Unfortunately, but not unusually, price drifted back up and left us in the red. However, we're still pretty far from our Stop at 2254, and if you look at the zoomed in chart you'll see we closed right on the 8ema. The tiny candle you might see after the close is the beginning of the 4pm-8pm candle.
Today's candle and the 2 previous candles form a bullish candlestick pattern called a Morning Star, which is not constructive for our short position. However, Stochastics are not in the oversold range, so the Morning Star is somewhat impotent.
Worse than the Morning Star is that we bounced off a support area. Looking left you'll see this area has been both support and resistance. We temporarily breached it and we were looking good. In fact, until we reversed back up above today's entry, we were forming a Bearish Doji Sandwich candlestick pattern, which was very promising for our short position.
We may be in a little trouble here, but we have to give this trade some room. We have several possible sources of resistance which could send the price back down. In order of distance, least first:
- 2 downward Trend Lines (thin, white, angled lines.
- 20 sma
- 34 ema
- 50 sma
- Bollinger Band
- 200sma
There are also Fibonacci retracements between today's low (2201.50) and the previous swing high (2253.30) that may serve as resistance levels.
So, it was an obvious decision to hold the position at the market close.
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