Short Trade Opportunity on S&P 500 Index (also SPY ETF)

in #technical-analysis7 years ago (edited)

S&P 500 Daily Candle Chart:


Source: https://www.tradingview.com/chart/FC8ERcKh/

What You See on the Chart

The red and green box near the right edge of the chart shows the stop (red) and target (green) area of the trade. The purple line extending from the right-most candle is my educated guess on the future price path. The red line represents the 50 simple moving average (SMA) and the blue line is the 300 SMA. You'll notice that I also drew in an extension to the 300 SMA on the chart, which I did to help me visualize where price would be relative to it when I considered future price action.

Trade Plan

About as simple as they come: wait for price to close below the major horizontal price support (highest of the dotted lines) and short on the first re-test of that support, now assumed to be resistance (of course, this doesn't always work out to be the case - merely playing the odds, here). Place the stop a few ticks above the current all time high (ATH). Target the previous ATH breakout area. The reward to risk on this trade is almost exactly 2 (two to one).

Trade Logic

The latest all time high breakout has not been adequately tested, IMO, with only three daily candle wicks testing that area (lowest of the three dotted lines on the chart). Average daily volume has been decreasing since the latest test of the 300 SMA and looks primed to test that moving average again, since it is trading at historical record distance from it (translation: price has moved up too high and too fast and is due for a correction).

SUGGESTION: When Trading Any Type of Market, Have a Plan and Know Your Risk!!!

Also, please be a strong person who can take responsibility for your own decisions. When you willingly put your own capital at risk, any loss you take on is solely on YOU, as you are the person who ultimately hits the "buy" button.

You're an Adult and I Refuse to Hold your Hand

What you see in this post is merely my opinion on what I consider to be a relatively sound trade opportunity, nothing more. Do your own research and have some knowledge before you go and start trading off of other trader's suggestions. Don't be a blind man following a stranger's words on how to traverse a busy highway. Don't be a fool, ya hear?

Be a Playa Like Me ;)

Deuces.



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