I'm currently thinking that 381 was the end of the retracement and we may complete a head and shoulders pattern before heading for our final destination in the 500-520 area.
I'm in long from 385 so will look to add to that at about 400 if this pattern plays out. If not, I will simply add to my position on each pullback.
EDIT (14 Oct - 12pm AEST) - After conversing with my good man MoonTrader below, I have decided to remove my 375 stop loss in anticipation of one more move south. My overall profit target remains unchanged and I will still scale in at pullbacks.
A reverse H&S is only valid if it follows a bear trend. It doesn't really apply to pullbacks.
DanLaffas
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Oh ok. Something I didn't know. I guess I'll just stick to the plan of scaling in with each pullback and moving up my SL.
Thanks for the advice MoonTrader :)
MoonTrader
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No problem :) Not saying it won't happen, though. I think the bear trap will last a couple more days first.
DanLaffas
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Hmm, well my original thought was a bottom at around 350-375. I guess it's still possible as I am anticipating Willy to drop a little more and hit it's rising trend line as below. I wonder if price will keep suppressed over the weekend and resume to the upside on Monday?
DanLaffas
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I guess with all this in mind, I will remove my 375 stop and see if I can double down my trade. Overall I see this going up next week so any short term drop won't cause me any stress as I only have a small position until we officially reverse.
A further question MoonTrader (and anyone else willing to pitch in) - if a head and shoulders doesn't generally apply to pullbacks, would we simply be looking for a 'V' bottom around here?
MoonTrader
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Generally, what you want to see is the market starting to make higher lows and then wait for a breakout above resistance with volume. That's really all we have to go on, but it's usually safer to trade with the trend, so this might be a good time to buy.