The 150 to 161 resistance (.618 of recent swing measured from the 175 high) is an area to anticipate selling. This was stated clearly in yesterday's analysis. Best practices dictate: you should be thinking "sell" at resistance levels, not initiating new long positions. We avoid buying into resistances, even if the market is strong and goes higher because we are interested in high probability. Since the herd reacts to market moves, instead of anticipating them, it is easy for them to lose sight of the long term probability of a particular outcome. Buying into highs is a low probability behavior and when it produces a profitable trade on occasion, it reinforces this ineffective behavior. When you stop focusing on the money, only then can you better see the significance of best practices and probabilities.
So where is the next opportunity? The 136 level is where the immediate is located. This is one place to anticipate reversals. The other area is the 126 to 118 (.618 area of recent swing). If price falls through both of these predetermined areas (ANYTHING IS POSSIBLE) then we will be looking for an extreme price zone reversal which can occur in the low 100s.
In summary, the current candle formation implies further weakness which is healthy and required in order to find a new long swing trade setup with attractive reward/risk. In general, these markets appear to have found some stability and may have established a long term formation which points to greater strength in the near future. The key to capitalizing on this is letting the market prove itself are predetermined levels. That means the next pull back should not push new lows, if it does then you reevaluate and adjust to the new information. You don't fight the market, you just sit back and go with the flow.
Questions and comments welcome. (Visit S.C. for more frequent updates across various markets).