Well, that was a nice little pop[, right?! You will recall that we advised a BUY on a strong close of the candle that pierced descending resistance. Let's review what happened next on a chart...
As suspected, the selling pressure at this confluence of key resistance has been sufficiently strong to snuff out the rally for the time being, and it wouldn't surprise us to see a consolidation back to the $640-620 area before sufficient new buyers jump back in to reverse the order flow back to the North.
Should this occur the market is likely to encounter far less resistance from $710 at the second time of asking and if we get through at the second ask, the top of the previous trend channel, currently at around $760, is a realistic target.
Having said this, its very early days for this nascent short term trend reversal and it is entirely possible that the market will trade back lower than $640 (and perhaps as low as $550, again) before sufficient new buyers are encouraged back in.
Whatever the immediate future holds, what we have witnessed is a pretty powerful counter-trend spike which, if nothing else, signals a renewed willingness from some to buy back into the market.
So, how does one play it from here? Well, active traders who took our advice 24 hours back will already be flat again, having taken profit at the resistance we identified. Personally, we'd want to see a nice powerful reversal at $640 to hop back into the market long, this side of a rally through $710.
But that's just us. Having taken the easy money its sensible to trade cautiously until the market sends us further confirmation that its recent reversal is over.
In any case, we are watching this market very closely again and we shall keep you informed.