Recommendation: SELL SHORT A REVERSAL BACK DOWN /OR BUY A BREAKOUT
Current Trend: Short-term sideways. Med- and long-term up.
Strategy: Sell short the next reversal day down. Or, buy only if a closes above line 4.
(Daily)
Chart Setup: A sharp breakdown of line 3 last week saw the index reach our downside target the same day. It has bounced back sharply, more so than I expected; and right now frankly it could go either way, but there are increasing signs the next move will be down. We’ll let the price itself dictate what to do.
Strategy Details: Sell short a reversal day/candle down from current levels or higher (this may well happen tonight, and if it closes near its low of the day, that will be a short signal).
- However, if it closes above line 4 (2485) then go long.
Target: For a short signal, take partial profits at recent lows of 2437/2438. A close below 2437 would be a further short signal for a drop to 2418 (line 1) to 2410 (line 2) for taking profits in that zone.
- To the upside, a close above line 4 will target 2500/2502.
Stop-loss: For a short signal, stop is a close above 2485. (That will also be a signal to reverse and go long). For a long signal it’s a close below 2470 then a prior one-day low from 2495.
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