TAOST Market Thoughts 18 August 2014

simple trading

I’m on a “mini vacation,” but have gotten a ton of questions expressing confusion about what’s going on in the markets right now.

As you can see from the screenshot above, price on the DIA bottomed out right at previous support (from back in May) at $163.13 and proceeded to bounce.  A good buy signal flashed on Monday 11 August 2014 as price took out the high of Friday 8 August 2014 (165.38).  In truth, I would have been interested in buying the previous day’s high because of the Support Level combined with the rising MACD Histogram noted by the arrow.  Whichever long entry was taken, that $163.13 level would be the initial stop loss level.

Obviously, the trade would be working out quite well now.  If price can make it through the top of the Magnet Zone (denoted by the top left pointing arrow… at the 61.8 Fib Level), I suspect we can start looking for a new assault on the all time high at $171.32.

Whatever way price proceeds, be sure to keep that protective stop in place a little below 163.13

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