This is a textbook reversal I'd like to illustrate with GS. If you were still pressing your shorts at 161-163 you probably were not looking at the technicals. There were several clues over the past two weeks that should have alerted anyone to pare down the trade. First the divergence between price and short-term momentum (3/10 oscillator). The second was the bounce off the 155 day xma coupled with aforementioned divergences. The 3rd and final warning (you were watching the technicals right?) came when the the trendline was broken to the upside.It pays (literally) to watch the technicals if you are playing in this market...
PS. This is for illustration only and without a technical outlook going forward. I will note it's short-term momentum ended overbought at the close therefore a pullback is in order. If I had to guess here I would view this as a wave 4, before heading in the wave 5 down to 155...
