So here is my plan: If 290 breaks, then I want to see how price behaves in the mid 280s which is the .618 of the recent swing. If price falls below that, then 270 is the next support which held previously (I wrote about the importance of this level in my previous report). If the 280s hold, I will look to add back to my small position, if 279 is taken out, then I will be fully stopped out.
IF price breaks below 270, that will open the door for a retest of the 250 level which is also a key support for a number of reasons. It is a 1.0 extension measured from the highs, and it is also within the .618 of the entire structure that led to the 355 swing high.
If I get fully stopped out at 279, I will not reenter until I see bigger picture momentum showing clear signs. At the rate this market is moving, that may take a couple of weeks. Keep in mind, the type of trade I am focusing on is a swing trade. There are more frequent opportunities both long and short on the smaller time frames if you are looking for more action, but you must be quick on the trigger and be extremely flexible with your decision making. Being caught with an opinion on the wrong side can be expensive.
Right now, I am leaning more on the side because a strong market spends more time messing with highs, rather than lows. A break below 290 will establish a lower high formation and that often leads to further weakness which means the oncoming supports are more likely to break. Not exactly a good environment for longs.
In summary, I am more interested in reducing risk at the moment. If price retests the 280s or low 270s and shows significant support and reverses, I can always get back in after some confirmation. Strong markets push resistances, not keep testing supports. I am still holding a small portion long with a stop for half at 289.50 and the other half at 279 to give this market a chance to prove it has strength in the 280s and negate the current environment. Let's see what happens.
Comments and questions welcome.