SP500 - Bienvenido Matador! Bullfight starts! It is a Sell now
Nice and obvious break yesterday, delivering the long monitored sell setup. What do we have here: Price trades below Kumo (also below 100 WMA), Tenkan below Kijun, Chikou Span below price and in open space, Future Kumo crosses bearish, both trendlines are broken. DMI has been bearish for a while. This is a perfect sell setup. Watch for signals, which would validate the trend reversal and confirm the new trend : Chikou Span needs to cross below Kumo, Kijun should also cross below Kumo, and most importantly Price has to clear the previous key support/resistence level (1840).
How to trade it further if you have not yet enterred the 1855-1860 break initially yesterday, or have not yet bought any put options? If we are lucky, with some bulls denial and some early short closings 1840 will try to hold first, and then we can see a pullback to 1855-1863 levels. This scenario has some chance looking at low Stochastic level. After the huge drop, Europe might show some correction today as well, giving US bulls a little last confidence to attack. If you see this possible bull trap, use this opportunity to SELL first units. Later as trend pick up confirms, sell on any retest, with trailing stops at Kijun + Buffer or 100 WMA + buffer. If you fear 1840 breakdown will hapen earlier (missing the pullback) then buy ATM (or slightly OTM) Puts for April maturity.
(Summary: Short 1855-1863 / Initial Stop at 1876 / 1st tgt: 1810)
How to trade it further if you have not yet enterred the 1855-1860 break initially yesterday, or have not yet bought any put options? If we are lucky, with some bulls denial and some early short closings 1840 will try to hold first, and then we can see a pullback to 1855-1863 levels. This scenario has some chance looking at low Stochastic level. After the huge drop, Europe might show some correction today as well, giving US bulls a little last confidence to attack. If you see this possible bull trap, use this opportunity to SELL first units. Later as trend pick up confirms, sell on any retest, with trailing stops at Kijun + Buffer or 100 WMA + buffer. If you fear 1840 breakdown will hapen earlier (missing the pullback) then buy ATM (or slightly OTM) Puts for April maturity.
(Summary: Short 1855-1863 / Initial Stop at 1876 / 1st tgt: 1810)