I’ve been quiet for the past 2 months about predictions because I strongly believe that if you have nothing of value to say then don’t waste peoples time. However, after 2 months of quiet, I thought it was time for an update.
After giving us the opportunity to get long a 50% position at an average price of 223 the market has done nothing but meander back and forth. This behaviour pattern is not uncommon in a market after a period of high volatility and simply signifies a period of value testing – does the market feel fairly priced at this level?
We now need to consider what to do with our small 50% long position.
On the upside I will be extending my position to long +100% if we break above 330 (The market is currently trading at 260 at time of writing). This is a pivot high following the reaction to the 166 lows back in early 2015 and breaking this should see a period of sustained higher price action. On the downside I’m no longer willing to see a loss on this small position so look to place a stop below the recent congestion level at 230.
A final note of caution, recent market behaviour will have made people lazy with stops and undisciplined in their trading; don’t get caught out! Quiet periods like this rarely signal when they end.
The end is likely to come as a sustained move in one direction or another; often not a dramatic surge but a consistent grinding move which will catch people out who are waiting for the retracement to close out. Stick to your stops and your trading discipline.