The long term trend remains up. Last week I stated that the first likely area of support was the 157.50 level which represented the October 2007 high. What is interesting is that the market not only traded down to this level but it also traded just two ticks below the March 2001 high at 155.75 (lowest green line) just before rallying for most of the week to close higher than the previous week and more importantly, above these two important support levels. Ordinarily I would consider this to be very bullish but when looking at this week's price action compared to previous week, the rally was not very strong. At this juncture I would say there's a 50-50 chance that this past week was just a week rally in an intermediate term down trend. If we get a weekly close below the lowest green line, then the 40 week moving average is the next support target at 151.38. If we get a strong weekly up close then there is a strong probability that the May 2013 high of 169.07 is challenged.
CONCLUSION
I will continue my series of articles on hedging next week. I was unable to put anything together this week due to time constraints. Next week I will talk about how to lower the cost of hedging and provide a general blueprint of when to hedge. Have a great weekend!
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