Sitting and waiting

Following the breakdown at the beginning of August, we have been in a wide ranging consolidation area for the last few sessions. It was almost inevitable that there would be a snap back following the sharp drop - whether this volatility will result in a further breakout to the downside, or a new uptrend, is anyone's guess.

These periods are where trend followers have to be patient, just sitting and waiting to see if their stops are hit, or whether the trend picks up steam again.

The other major markets are showing the same patterns, although the German DAX is looking vulnerable as the rally has been fairly weak and, as I type this, is close to breaking out to the downside again.