The SEC interference creates a ton of uncertainty, and markets do not like uncertainty at all which can lead to extreme fear. That is what we are seeing at the moment. The fact that price did not reverse within the 713 to 520 is not a good sign, but does not mean this market is going to zero.
469 is the reversal zone boundary relevant to the 565 low. The current candle is touching that level as I write this. The fact that price is in this location makes it high risk in both directions. Buying right now is extremely aggressive because there are no signs of buyers, and shorting here is extremely risky because chances of reversal are high. Situations like this are the reason why I do not get too big too fast when it comes to building inventory for a broader market move. Only fractional sizing and the willingness to lose will prevent you from being shaken out. When I say the willingness to lose, it means you are sized to the point where if this market really falls apart, it will not wipe you out. That is the risk you take when position trading.
As far as shorts go, IF you had the ability and courage to short this market, and managed to hold it, now would be a good time to consider taking profits or at least tightening protective stops. Again I do not short these markets because I do not trade them on margin, but if I was short, that is what I would be thinking at the moment.
In summary, as long as momentum is , I would avoid any new longs. If you are feeling aggressive, you can wait for some sign of reversal off of this particular area and initiate a small position, but do not expect stability or follow through until there is an appearance of a clear reversal structure (higher low) and/or break of the . The best thing you can do during a situation like this is plan ahead, and NOT react to what is happening now. Reacting is what leads to selling bottoms and buying tops. This situation is no different than buying at 1350. If the whole regulatory situation turns out to be less threatening than expected, this market is going to squeeze hard, and you do not want to be caught on the wrong side of that. Can this market go lower? Sure, anything can happen, but remember when a market looks its worst, often that is a better time to consider buying.
Comments and questions welcome.
Posted this buy in on Feb 1... We touched it twice. It was some good money to be made and still is. I think we bottomed out.
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To get it right about shortening.
I’m still green on most of my trades, I’m in for long term. Are you saying it’s wise to put in sell orders (protective stops); around my buying prices?
For me it means about another 50% off the current price.
I’m not worried. Just trying to understand the bigger picture.
I could sell now and take my profits but yah the change for a reversal is possible.
Lessons lessons lessons!