Some of you may remember when I shorted the TSX60 index in late May. It was a great trade that lead to an almost 70 point decline on the markets. The reason I took this trade is simple--there were 5 resistance levels. 875-880 coincided with 2 trend-lines, the 50 moving average, a previous pivot low and the 61.8% Fibonacci retracement level. No two factors were at exactly the same level, but all came close to converging and indicated that the price would have a very difficult time going higher. You may also notice the bear wedge pattern created by trading up into these levels after the down move in early may--another reason to expect lower prices.
|Five factors lead to a big move down|
So, the next time you're torn between two trades, make the decision simple and choose the one with the most support or resistance levels in your favour.