Last week’s “Island Reversal” High and subsequent swing lower remains within the overall context of a normal retracement pattern within the larger bull uptrend. Also of key importance is that price tested and remains above the “2014 WVAP”…at 1858…Each retracement swing has consistently found support along this rising weighted average price. Bullish structure remains intact until there is a clearly defined violation of this VWAP.
Key support marker now becomes the 1858 – 60 zone for any future retest…Failure for buyers to respond to any additional selling pressure weakens price structure…so we continue to be vigilant at key price zones. IF prior day low (1861.25.00) is violated, THEN initial downside price target measure 1859 test, followed by 1853 – 1850 – 1847.
Initial intra-range support resides at the 1866 – 68 zone…Successful buy response off this zone supports the short-term bullish response off extreme lows. The Three-Day Central Pivot Zone (3D CPZ) is between 1876 – 78…This currently is initial resistance on the upper edge of recent range. Penetration and conversion of this zone displays increasing strength and targets 1880 – 1885 zone.
Expectation is for trade action to remain within recent upper and lower boundaries 1862 – 1876…which is within the context of the 10-day Average Daily Range. Trade Strategy will focus on Range Trade Strategies until a new defined trend direction is established.
Focus on the Process…Not the Outcome. ALWAYS USE STOPS!
I take the long term view. I am willing to lose in the short term. I understand that losses are a necessary cost of doing business, like inventory to a merchant. Drawdowns are viewed as temporary. I realize that my wins and winning periods are part of the broad process. Each trade is but one in a string of trades. What is happening now is one piece of a much larger puzzle. Because of this I do not get overly euphoric or despondent.