Thursday February 4, 2016
Key Developments :
- Market searching for it’s next direction with volatile intraday moves.
Looking at the chart above you can see the amount of intraday opportunities there are to trade in both directions. It requires one trade the price action and have no bias on the market direction. That being said there is little to be desired from a swing traders perspective, as the market continues to make large intraday moves in both directions.
On the intermediate term, we are still in this trading range where we can see the development of both bullish and bearish H&S patterns.
If we drill into the 5 minute chart however, it appears like we broke north of a symmetrical triangle formation and closed above it. It will be interesting to see if we see some follow through on that pattern tomorrow as the measured move would target the gap fill from Monday. When we see these H&S like patterns, a failed breakdown, that then breaks above the upper pennant trend is our clue that this may not have been a H&S pattern. This is why it is important to recognize the patterns and use them as risk measurements. Trade them. Know where your stop should be and honor it.
The Bottom Line:
The market is once again, in a flux, just like it was in the middle of last week. It is searching for direction. There are intraday patterns to play, but the price action is choppy and trends are lasting for only about an hour at a time. Keep that in mind and manage risk accordingly. That being said, the bulls are clearly protecting the September low to this point. So keep this week and last weeks low, along with the September low in your head. We can be short below that area, but keep an open mind as long as we are above it. This market may give us more opportunity to short higher.