V is for Volatility, and dramamine is the required prescription for those without a proper sense of balance.
I love to take trades with the trend until they stop working; I will leave guessing market tops or bottoms to those who care to try and outwit the market.
How do you spot the early stages of a reversal in a day like today? Stochastics divergence and climatic volume help, along with patterns like today’s megaphone.
Life is also easier if our system has a means of projecting potential targets. When we get near them, then it is important to consider the risk and reward of our remaining potential target vs the profit taking retracement.
Prudence suggests leaving before the fire alarm goes off and everyone heads for the exits.
Today’s movements had more double crosses than Heist.
Best to be thinking three steps ahead as to what the boys intraday game plan is so we aren’t confused when they gun the stops.
Here is my thinking about today’s action:
The 20 minute overnight spike was to knock out the stops. Then the misdirection play continued until the marginal lower low was made at the normal contra time. As shorts were squeezed and positions unwound the gap was filled, and yesterday’s high area was the resistance to take profits and have the reversal trade put on.
If you were shorting our system, 42 was the stop and the trigger for the reversal.
There is always a trade. Take your stop out and decide whether to reverse or not. I find it easier to think on the sidelines, then decide what if anything needs to be done next.