As the market was clearly running out of downside momentum, we decided to cut the 2nd half of our short position at 1280.67 [1334.07 - 1280.67 = 53.4 (gains)].
Looking at our indicator, we can notice they continue improve:
- The Sigma Trend Index (STI) moved from '-32' to '-14'
- More importantly, after 2 days in oversold territory, the Trend Level (TL) moved from 1(oversold) to 2 (negative).
Looking at the chart, we can clearly see that the recent decline occurred in 5 waves and that the market found some support around December's top.
It looks like a meaningful bounce back could develop from here, but it is too early for going long now.
We consider the risk/reward isn't anymore in favour of short position. Nevertheless, it is too early for going long in this market.
In this context, we take a wait and see attitude, waiting for a nice opportunity (shouldn't take too long...)
We will open a half long position if/when the market is able to trade during at least 1hour above 1300 or if we get a clear impulse to the upside.
Current position: no position
Have a nice day,