Having your OWN perspective and outlook frees you from the confusion of the hype. From irrelevant news that aims to drive traffic, to over exaggerated analysis written to attract attention, it is very easy to become indecisive when the market gets a little shaky. momentum is easy (if you are long), but when a retrace comes along, that's when fear begins to distract you from your original plan, especially if you are a regular consumer of low grade information. The solution? Learn how to weight and categorize information based on your OWN perspective and outlook.
My perspective and outlook has been and still is. I am managing a position trade which means I am looking to capitalize on a broader move higher. The price action that is occurring now was a scenario that I was anticipating. It is not that surprising that selling shows up at the 9887 to 10836 (.618 area of recent swing), and simultaneously off of the broader . In my previous report I wrote that I was going to sell 15% of my position around the 11,400 level depending on the price formations. The market never went to that price, and the candle came sooner. Can you see why I have not been encouraging people to buy at these higher levels?
What to do now? Lock in some profit earlier because of a selling pattern? My answer is in my outlook for my trade. I am playing the bigger picture and expect much higher prices based on the magnitude of the level that this market is coming from. On top of that, the that is still intact carries more weight than the candle and tells me that buyers are still present (especially if an forms). Since momentum and structure is still generally in my favor, I am willing to risk the profit that I am managing at the moment in order to let my plan play out. My outlook and perspective along with the supportive structure on the chart all tell me the 11,400 is still reasonable to expect. I suspect that price will push when the is compromised, and any failure in that area is when I will sell 15% of my position (especially since it would be considered a formation at that point). IF price never shows any subsequent failure, I simply let my winner run.
The scenario that would cause some concern for me would be a decisive break and close below the which means price would be push below the high 9Ks. In that scenario, I still would not sell, I would wait for the next retrace attempt and then unload some there. By operating this way, I give the market a chance to go back in my favor, or at least offer a better price to lock in some profit and reduce risk AFTER it has proven weaker than anticipated.
In summary, having a perspective, knowing how to weight information and accepting the relative risks are paramount to sticking with a bigger picture plan. Can some news come out of nowhere and this market? Sure, but I am willing to take that risk. Managing a position trade is more like managing inventory. When the cost of inventory gets cheap (market is selling off) you buy at wholesale prices. When peak season comes around (new highs) you unload it at retail prices and then wait for wholesale prices to come around again. As long as prices are not going to zero, this is a good analogy to consider. Charts help us measure, evaluate and anticipate, they can't decide our risk appetite, only you can.
Questions and comments welcome.
My targets are somewhat similar to yours, although I wonder if the upcoming bull flag break out will march right through blue dotted ceiling line or if we will see some correction first like I have illustrated with the Elliot Waves (12345 + ABC) in my chart update: