A pause yesterday wasn’t a big surprise, although perhaps a little disappointing to some traders who might have been banking on an aggressive gap up and direct continuation of the move higher.
As it is we’ve managed to catch this latest leg at virtually the swing low which should mean that any minor retracement stops well short of triggering any break even exit stops we’ve placed. Yesterday we discussed profit taking stops briefly – we should be in the habit of paying ourselves but at the same time we want to keep long exposure here in case price continues directly higher beyond the pause, or in the event that a minor pull back meets buyer support.
We can see that NQ / Nasdaq and YM / Dow in particular have run into resistance; and both the Dow and ES / S&P 500 proxies have travelled far in a short period of time – so even a little pull back here before an attempt at resumption would not be a big surprize. Note also that ES has actually plowed through former resistance so any retracement here will be testing to see if that resistance now offers new support – such a development will not be lost on traders and will become catalyst enough to spark a new leg to this rally.
Time to Plan Your Personal Profit Taking Stop Strategy
Price may not pull back much here, but the odds of it increase the longer price stalls. Decide how you are going to handle this pull back now, before it happens, so that your decision making process happens without the emotional burden of falling prices.
05.02.08 09:16 #