Monday, April 19, 2010

Corrective or impulsive?

Well, while I got a lower low, it appears to either be a 5th or C wave. On the hourly chart, price from the top to the bottom reflects one complete wave as price was never able to close above the hourly 8 SMA. We also got classic divergence on the last wave signaling it as the end of a larger wave structure. While I did get stopped out of my ES short (as I was trailing based on a subdivision), my option trade I decided to keep on based on the hourly price action. My stop on the 1/2 position of May options (FAZ 14 May Calls) is now Friday's high or a time stop on end of day Wednesday (if we haven't moved below today's low), whichever comes first. Should we get a reversal tomorrow on the 15 min, I may opt to be aggressive here and add another 1/4 position to my May calls depending on my mood. Either way, I'll be looking for an opportunity to restablish my ES short.
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