The chart shows that the DOW is struggling at the moment to climb much higher on the larger time frames. In light of upcoming risk events, I would assume that the recent departure from the 15700 region is a result of large long positions being liquidated, and potentially shorts coming into the fray. Friday's NFP result proved uneventful for committal to a trend direction.
Reasoning for executing a technical short trade:
1) Pin/Hammer indecision at the top of the range.
2) Bearish engulfing candle has printed.
3) Event risk from the upcoming FOMC implies that any large positions should be trimmed, in advance, to reduce risk exposure to adverse market movements, whether favourable or not, this is not a game!
4) Price has been consolidating between the 100/200 daily EMAs, a close below the 14,736/50 area should lead to a sustained rout towards the 14,114/000 region.
Entry: Aggressive shorts could be executed at current prices 14,900/15,070 in favour of tighter stops in the 15,220/300 region. Better shorts may be taken on any rise into the 15,070/15,120 region with stops placed in the 15,400 region.
Safer shorts: these should be executed on a close below the 14,736/50 area for an impulsive sell off to materialise. The idea here is that the market has resolved a trend direction, and has committed to a descent towards lower levels. Momentum should be in your favour with this setup, ideally resulting in litle draw-down if aided by an event risk catalyst.
Dilemmas: The current dip in the DOW may already reflect players trimming positions, in which case the market is more neutrally positioned than bearish. This should be considered if executing aggressive shorts as you may be caught on the wrong side of the trade on uptrend resumption.
I have not looked at volumes for the DOW etc. so this trade has more of a technical setup than an all encompassing play.
Reasoning for executing a technical short trade:
1) Pin/Hammer indecision at the top of the range.
2) Bearish engulfing candle has printed.
3) Event risk from the upcoming FOMC implies that any large positions should be trimmed, in advance, to reduce risk exposure to adverse market movements, whether favourable or not, this is not a game!
4) Price has been consolidating between the 100/200 daily EMAs, a close below the 14,736/50 area should lead to a sustained rout towards the 14,114/000 region.
Entry: Aggressive shorts could be executed at current prices 14,900/15,070 in favour of tighter stops in the 15,220/300 region. Better shorts may be taken on any rise into the 15,070/15,120 region with stops placed in the 15,400 region.
Safer shorts: these should be executed on a close below the 14,736/50 area for an impulsive sell off to materialise. The idea here is that the market has resolved a trend direction, and has committed to a descent towards lower levels. Momentum should be in your favour with this setup, ideally resulting in litle draw-down if aided by an event risk catalyst.
Dilemmas: The current dip in the DOW may already reflect players trimming positions, in which case the market is more neutrally positioned than bearish. This should be considered if executing aggressive shorts as you may be caught on the wrong side of the trade on uptrend resumption.
I have not looked at volumes for the DOW etc. so this trade has more of a technical setup than an all encompassing play.