Tough call today. The Sunday night trading, after the weekend, continued the bullish trend on the 1 hour chart, as shown above. Then around 3am ET the trend reversed downward until it rejected off support at the 50sma and a confluence of some Fib levels. At 9:30am we rocketed upward until we rejected off resistance at the 200sma. We drifted downward until the Close, where we closed the day below the 8ema.
If you based your decision purely on the candlesticks, you would have definitely closed the position with a profit at the Close. Not a bad decision, but we're still in a Butterfly pattern, which has a high 75% success rate, where "success" means hitting .618AD or higher. Add to that the Stochastics(14,3,3) are now oversold, the 2nd to last candle made a Hammer candle, the bodies of the last 2 candles together made a Bullish Engulfing pattern, and we have some nice padding down to our Stop at 1318.
We could easily continue downward, but I think we're just responding here to a large, green, fast candle that hit the 200sma. We just have to tolerate some respect for the 200sma, hold our break even Stop, and believe the Butterfly odds are in our favor.
The decision for today is to take the riskier stance, since we're in a "risk-free" trade, and the Butterfly odds are in our favor, and hold the position.
We could have exited with about 1330-1317=13 points profit, but if the pattern works, we'll get 1357-1317=40 points. That's not greedy, that's having patience and seeing the bigger picture.
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