S&P 500 IndexShort
SPX Broke Rising Wedge - Time to make some $$$
**THIS IS NOT FINANCIAL ADVICE. THIS ANALYSIS IS A DOCUMENTATION OF MY OWN TRADES AND IS FOR EDUCATIONAL AND ENTERTAINMENT PURPOSES ONLY. TRADE AT YOUR OWN RISK**
**Please note that the time horizon of this analysis is around 1 week**
SPX failed to break the 2900, a very important Fibonacci level that played a critical role the initial sell off back in March and the corrections that occurred over the last couple of years.
Trading setup:
First, I am going to be conservative with this one and not dismiss the probability of a horizontal or a downward facing double top before a downtrend. Why? Because In the last selloff, a very similar pattern occurred where a double top was formed after the rising wedge was broken (highlighted in white). In other words, SPX seems to decelerate its trend after an important trend is broken, rather than pick up momentum. In fact, this has already happened once in this trend; notice how the rising wedge was broken before (white line), but the price decelerated instead of trending downwards.
What happens tomorrow in the pre market will confirm whether the breaking of the rising wedge is legitimate or not.
Trading plan
Scenario 1: Pre market's price action confirms the breakout.
Scenario 2: Pre market's price action reverts the breakout
Please like and let me know if you agree/disagree with me or if you have any comments.
Thanks for reading! :)
**Please note that the time horizon of this analysis is around 1 week**
SPX failed to break the 2900, a very important Fibonacci level that played a critical role the initial sell off back in March and the corrections that occurred over the last couple of years.
Trading setup:
First, I am going to be conservative with this one and not dismiss the probability of a horizontal or a downward facing double top before a downtrend. Why? Because In the last selloff, a very similar pattern occurred where a double top was formed after the rising wedge was broken (highlighted in white). In other words, SPX seems to decelerate its trend after an important trend is broken, rather than pick up momentum. In fact, this has already happened once in this trend; notice how the rising wedge was broken before (white line), but the price decelerated instead of trending downwards.
What happens tomorrow in the pre market will confirm whether the breaking of the rising wedge is legitimate or not.
Trading plan
Scenario 1: Pre market's price action confirms the breakout.
- Entry: Enter a short position as soon as market opens.
- Stop-loss: A little above the lower trend line of the rising wedge at that time, around $2,830
- Exit: A little above the support line at $2,660
Scenario 2: Pre market's price action reverts the breakout
- Entry: Wait to see whether the price will break the trend line (in white). If it fails to break it and volume confirms the failure, then enter at another break of the rising wedge's support. If it succeeds, wait to see for a possible double top.
- Stop-loss: A little under the resistance at $2,870
- Exit: A little above the support line at $2,660
Please like and let me know if you agree/disagree with me or if you have any comments.
Thanks for reading! :)
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