S&P Analysis Week of 11/08/2020: Post Election Madness

Who is the newly elected President of the United States? How does that impact the markets?

As of this posting, we don't know who the elected U.S. President is. Even if a winner is declared, it is most likely going to be contested.

This week there are many variables a. One important variable is the consolidation that price is making in a triangle wedge.

We are currently at the top portion of the triangle wedge so price is in a critical spot. If price breaks out, we could easily get to and exceed all time highs.

If price is rejected then you will see price pay a visit to the last broken resistance area area. This breakout area was heavy resistance and was never retested. Price WILL come back to this point at some time...when is anyone's guess. Price can take days, weeks, months or years to retest that area.

My guess is that the retest will be sooner than later.

I indicated three setups:

• Trade Setup 1 (long): The easiest would be a break above the triangle wedge because it's cleaner and easier to play.
  
  
• Trade Setup 2 (short): A rejection of the top of the triangle wedge.
  
  
• Trade Setup 3a (long): A bounce off of the broken resistance. This would satisfy the retest. However, if it does bounce this is not a preferred trade for me because of the overhead resistance. Price would have a lot of work to do to breakout above this area.
  
  
• Trade Setup 3b (short): This is a continuation of trade setup 2. If the breakout area fails, then price will continue most likely to the bottom of the consolidation triangle wedge.
  

Note: The consolidation between the triangle wedge is energy and a lot is building up. Once the energy is released either in the northern or southern direction, there will be a big move. This is just for awareness in case that even happens during this week.

Good luck and be careful.

Remember: When it feels really right, it's probably wrong. And when it feels really wrong, it's probably right.

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Comment:

It looks like it is trade setup 1 for sure this week. Technically that was a brake out with an intra-day retest of the diagonal resistance line. However, I suspect after price reaches its intended target that we should see all the lower levels retested.

I had the direction correct on my chart, but I guess I needed to put the title of my chart higher...lol. Price is pumping into my header. lol

Comment:

After the big reversal yesterday during the NY session, price is back pretty much where we started on Sunday night testing the breakout area (which I mentioned would happen and why you don't play breakouts).

Caution here. Generally if price makes a higher high, that would be a long entry. However, with the big rejection/reversal, I'm not certain it's the same trade setup #1 anymore.

I am looking more for trade setup 2 or I may just sit it out until there is additional clarity.

Trade active:

Took the long setup #1 during the overnight session since it technically gave a signal. I had enough room to move my stop loss to break even so this is a free trade.

So far trade setup 1 is on time and on the spot.

Comment:

My long trade is profitable. I sense we will be testing the highs set on Monday before the big sell-off. At least that's what the technicals suggest.

I will be holding this trade longer. I have my SL at break even still. Not ready to take profits. I want to push this trade more.