Background

The reaction higher from the February 11 bullish hammer has been very strong, with six weeks of higher highs and lows. However, after an indecisive looking doji and a bearish outside candle on the daily, we expect a correction lower.

After the long weekend and a positive start to the week, price action has turned lower and there remains plenty of scope for a correction.

We now look to set shorts around current levels and on a rally in front of the hard stop level of 4,450.

Initially, we look for a pullback towards the Daily Ichimoku cloud and then the 38.2% Fibonacci retracement level with the 4160 congestion area below there.

Management and risk description

We have three targets and would look to take profit on 50% of our position at the first target and split the balance between the second and third targets. Our stop would be a break of 4,450

Parameters

Entry: sell USNAS100.i at market and at 4,420.

Stop: a break above 4,450.

Target: 4,290, 4,228 and 4,160.

Time horizon: two to 10 days.