5755 is the low that needs to be taken out in order to prove momentum is still in full effect. Like I wrote previously, bottoming is a process, and it is far from precise.
At S.C., our swing trade was stopped out at 5980. Stops are not pleasant, but they protect accounts from being wiped out by hope mode. That is when you stay in the trade, hoping it comes back.
Our inventory strategy does not change in a situation like this and the stop order was only for that specific swing trade. We are watching for a reversal formation to get long again because our strategy takes into account the probabilities of the broader location, and does not place any weight on noise.
As long as price stays above 5755, it will likely be setting up for a squeeze. If price reaches 5669 and reverses quickly, that will also count for a failed low formation which will prompt us to look for a reversal trigger as well.
The scenario for us is a break and close below the 5669 reversal zone boundary. In that scenario, we will stop looking to buy and just wait for stability to return.
In summary, momentum can present tough price action when it is right in the middle of a major . At S.C., we consider this random price action until the market provides proof by taking out a major level. These are the kind of areas where patience from experience comes into play. Our outlook has not changed, because nothing says that this market is going to make a new low at this point.
The most we can do now is wait for structure to line up for the next swing trade long.
Just curious, have you ever taken a course from Frank Bunn??