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Because of prior's day MTR (Thursday, July 31st) and strong bull BO, I thought the move down to B21 on August 1 was just a PB from that leg. My thinking was it's either a big leg down to a 50% PB of the bull swing, or a big bear leg that subdivided into two legs and a possible 2nd leg trap. I was aware of the fact that overall we were high in a TR, but my assumption was that we were going to get 2 legs up first before bears started selling again. The rally that started from B24 made me think that a possible endless PB was taking place to test back up to B5. Even though the FT that bulls got was weak, I still thought a 2nd leg sideways to up was more likely than a straight reversal down, simply because the channel was tight. I had a long position and was thinking of exiting below B42. Instead, I exited below B45 and went short.
How would you manage a long trade in this context? Should I have been more aware of the fact of a possible broad bear channel, due to the selling pressure and the 50% PB of the bear leg? Is an exit below the MDT more appropriate (B37-B39)?
Thanks in advance!
