Well…what a month. I hope you followed our advice and kept to your stop discipline which got us out of our tentative long position at 250 before the collapse down to 166. Since then we’ve kept out of the market to see what transpires.
Looking at the chart you can see that the trend is still down, so we should be playing this market from the short side. But there’s something in the way the market is behaving that makes me more inclined to still trade this from the long side – but very cautiously.
Our recommendation is to take a small 25% long position at the current level (226 as I write this) with a further 25% long at 220. Initial stops should be placed below 200.
On the basis of how quickly this market can move we will also give a short break recommendation. We will be looking to go short a full 100% of the way on a break below 160. We don’t believe this is the scenario that will unfold but if it does we can see a quick spike down a further $30 where we will look to cover our shorts (at the $130 level).