If you dont mind....
My analysis:
Your good or bad short, I say good because I most likely would have taken that short as well at the close of that bar. We have a big move up, a pullback, a big wacky up bar, then a big down bar that completely erased gains of the big up bar. That big down thrust after the big wacky up bar would have me thinking the big up bar was just people trying to run some stops and the pullback would likely continue. Hard to say wheter or not I would have gotten any profit since price bounced a dime or so into the down move. After the up first up bar of the bottom of that move lower, I
likely would have exited when the next bar was making its higher high. A small winner/scratch/small loser is irrevelant. I would still consider that entry good because it fits my criteria of a high probablity set up. One thing I can say is I wouldnt have taken a big loss on that trade. Initial stop would be a tick or two above that swing high, but since it was a fade that started going in my direction I would have tightend it up very soon. I never expose myself to too much risk when fading such a powerful move.
Now..
1. We got a little bounce, a spinning top showing some indecision followed by a bar that closed very close to its lows. Mostly likely I would have went short on the next bar, when it looked like it was not going to even come close to the previous bar's high. Since it was fading that big earlier move up I honestly would have only had 1 lot short so after two bars with no new low I would have exited the trade. No way would I have sat through all that sideways chop; the area you would be considering covering half your position.
Im going to combine your 2 and 3 since I would have been flat at that point.
2-3. Your "Cover or long" point. We have a bullish looking hammer, which would have gotten my attention, followed by another up bar closing well off its lows. I very well may have bought on the close of that second bar. The fact that price was so close to that down trendline may have kept my finger off the mouse. The next bar had that very small range, if I wasnt long at that point I wouldnt have gotten long on that bar. Why not short there? I never enter a position when price hits what I perceive to be a key reference area. I always wait for some confirmation. Seeing the next bar break through that trendline with some real conviction would have triggered a buy from me (if I hadnt been agressive earlier in that move and already been long). So I may have had a damn nice entry and caught most of that move, or I may have had a worse entry. Either way when price broke through that horizontal resistance area my stop would have been close behind in case it didnt continue higher, and I would have been stopped out most likely a few ticks above that resistance line you have. I think of trendlines/S-R lines as zones, not 1 pixels discrete spots, so just because price breaks through I dont assume its going to automatically continue, hence my stop placement.
4. Short on re-test? Absolutely. After the big red bar we have a bullish looking hammer, but it has a lower high and lower low. That would be my attention getter. The next bar also had a lower high and closed on lows. I would have entered short on the close of that bar.
5. Cover or long? I would have been stopped out of my short. That was a nice big candle, whenever Im up .20 or so I start trailing my stop pretty close. That next big up bar would have stopped me out, hard to say exactly where since this is all hindsight, but honestly if I took that trade I would have most likely pulled a quarter or so out of that move.
Now Im going to read NoDojis response. Last time her and I commented on the same chart our replies were damn near identical
*EDIT I spent much of the day driving, so this was the first chart Ive looked at. When I typed all that up I wasnt thinking about today being an inventory report day or any other news. Just looking at price action.
