Quickpost: Potential SPX Bull Trap Set up
Updated
Price action on the S&P 500 has taken an absolute beating but nothing ever goes strait down, and even the most bearish of people should accept that a bull trap should be in play between here and there, and I think we are getting pretty close. This is going to be big picture and I tagged this trade as long only for as a swing trade. I still think that the S&P 500 can go sub-500.
This series of lower lows is a frequent fractal on SPX and one reason why I think there is a high chance we are going to bounce here. Very good chance we go to the baseline of the Bollinger band, which I decided to not show in favor of the EMAs.
Additionally, the -x3 ETF for SPX, SPXU, is at long term resistance right now and this would be a very logical place for a pull back. These x3 or -3x charts often help tell the tale quite well when combined with the main chart.
Finally, if we tunnel all the way down we see something resembling a reversal structure.
All in all, this whole situation is high risk. Own your own trades, your own gains and your own losses.
- Price action went out of the 3rd standard deviation weekly bollinger band and since wicked back inside;
- Price also found support on the 400W EMA afer blasting through the 100 and 200 week EMAs as shown on this chart. This coincides with the 100M EMA, which as we will see, is pretty significant.
- There is a fractal set up with a series of lower lows and if I see this correctly, we should experience a bounce. The fractal between 2002 and 2003 shows we had a triple bottom so it is not like this bounce would predict we go straight to the moon.
This series of lower lows is a frequent fractal on SPX and one reason why I think there is a high chance we are going to bounce here. Very good chance we go to the baseline of the Bollinger band, which I decided to not show in favor of the EMAs.
Additionally, the -x3 ETF for SPX, SPXU, is at long term resistance right now and this would be a very logical place for a pull back. These x3 or -3x charts often help tell the tale quite well when combined with the main chart.
Finally, if we tunnel all the way down we see something resembling a reversal structure.
All in all, this whole situation is high risk. Own your own trades, your own gains and your own losses.
Note
Did some more tinkering with the chart and the fib ratio on the log chart synchs up with a 0.236 level. So to recap, we are out of the BB, on the 100M EMA, and at a fib ratio, and at a support. Further that, we still need previous support to turn in to resistance for the bull trap to be complete.I have been on some discussion boards/chats were people are saying this is so obviously bad that there doesn't need to be a bull trap, it will just go straight down. I don't think that is the case. There should be a bull trap. It may not be the bull trap as I see it, but there needs to be one based on how trading psychology works, and when smart money bias changes. And the US government cannot do/plan over 2T in stimulus and QE and there not be some speculation leading to some movement to the upside at some point to create that bull trap.
Note
Starting to look like this divergence may perform.
If, and if it does I expect something like this wedge to form. Time will tell.
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