Oh my, what a spectacular fall in Nymex crude oil further to my earlier article - http://fusioninvestor.blogspot.com/2009/01/nymex-crude-oil-head-shoulder-formation.html.
Certainly, the fall is a lot more than my expectation last night ... after I sold my longs, initiate a short, and then closed my short position, I had only expected it to fall to around $46 or thereabouts, and certainly not as low as $42.x ...
In retrospect, I still had room for improvement with this trade .... but my only "defence" is that it was nearly midnight, I had been right to get out of my longs, I had been right in getting a quick short, so, why be greedy when one is physically tired also?
Still, what I will take out from this experience is that this large fall should havebeen semi-expected, since the Head and Shoulder formation is not measured in minutes, but nearly over 24 hours, after a substantial rise over a week. In other words, it had enough "buildup" to fall significantly. I knew this theoretically, but when it comes to implementation, it is still not "automatic" enough for me to note even when I'm physically tired. Will promise myself to remember this one for future reference.
The fall, had a pennant pause, and then, continued to fall, again another classical Technical Analysis chart pattern.
Note also the "Measured Rule", which provides expectation of technical price targets which is also another textbook stuff here.
Three very strong technical points to note at the least.
"If only" I had kept the short position open ... shucks ... *grin*
Ok, just kidding with the "if only" - don't take it too seriously. One of the most important rule of being a trader is to not be greedy and not having regrets on past trades. I should be thankful that I had closed my long position, and not suffer a loss, and I should also be thankful that I did initiate a quick short also which is also positive. Both are far more than what I should expect. Anyway, back to work.