Ok,
Today the lower trend line held. Who knows what will happen tonight when the electronic market opens? No one.
For now, we settled at 75, that’s 5 cent winner or $250.00 per contract if you bought against the 12.70 trend line intersect.
One case where a trend line performed as predicted. We could still go below that trend line by 5 or 6 cents, squeeze out all the week longs and then turn around higher and go challenge the upper trend line of that wedge.
Overnight, make sure you have your sell stops in place. Also, given that the low was 12.70 1/4, I’d be a seller on a rally up to today’s high at 83 to take profits.
Look at the chart below. There are actually three (3) yes three trend lines, all of which could potentially being the one that holds as support.
Today the short-term one held. A lot of traders are looking at the 2 lower trend lines. one has support at 12.63 and the lowest has intersection down at 12.43. It depends on how bearish you are which target you pick
I can tell you today looked like a lot of folks tried selling 12.70 looking for a collapse, but in the last 5 minutes of trade they puked and covered their shorts.
Professional traders like to sell, b/c when the market breaks, it moves 3 times as fast as when it rallies. People being people, the like to anticipate that rush of 1) being right and 2) feeling the reward come in quickly. As such, very often, like today, you can profit by gritting your teeth and fading the herd. Sooner or later we may get a collapse. In my opinion it will come after one or more rallies to squeeze out the weak shorts. That’s why I am net long a small position here. I think we should get one more run up to the $12.90 to $13.00 level. If we do get a strong settlement, below 12.68-12.65, that could set off a barrage of sell orders, and then I’d flip and get short with that down move. All we are trying to do here is trade the range and use the trend-lines as levels to initiate positions. If we are disciplined, we should catch the bulk of a move.
See the 3 trend lines below.
CER