SP500 - Chances of correction & where the next high can be?
This post is rather an observation, not yet really a big trade idea. Of course if you feel like, you can trade based on it, but keep in mind there are not yet firm trade signals to rush for.
The charts are: 4 Hrs Ichimoku, 4 Hrs with Heiken Ashi, 1 Hr Ichimoku
Daily chart I did not attach this time, as that is clearly bullish, with lot of support levels lower and with no real chance for a break or a bearish reversal.
The current bullish move from the lows was pretty impressive and very quick. SP500 is about to reach the top of the trading range. What we have to start watching now is where it will print the next high close to 1900, well actually if we can see a higher, or a lower next local high compared to the previous all time high on the 4 Hrs time frame.
Anyway I would not be surprised if we see some correction today down to 1865-1870 levels. Slow Stoch is overbought and turning lower again after this strong bullish march, and we may see the first red Heiken Ashi candle as well. 1865 is important as there is the Kijun line too. If price can not pop up from there again gaining back the bullish momentum, then as you can see on 1 Hr time frame it can easily become more than just a 10-15 points pull back. With a 1 Hr chart Kumo break and additional Ichimoku sell signals it could be hit lower to next possible support of 1850-1855.
The difference now compared to previous breakdown in early April is that the 4 Hrs Kumo is pretty far below price and it is thick enough, so very likely even a bit bigger correction would be bought first ard 1840-1850.
This means even if we see some sell signals, either position sizes should be limited to half unit on shorts, or the stop loss has too be very tight. Be cautious with bearish trades, but be a lot more cautious with bullish bets! :-)
Generally I like to sleep well, so what I like to do here is to open very small outright short + buying some Put options and Put spreads for June maturity. Who knows, maybe Puts can work a lot better in time with less stress. And as you may have already realised I am kind of strategic bearish for equities at these levels, so I rather look for short opportunities.
p.s.: the reason I have been looking at 1 Hr time frame recently is that since equity indexes are trading in a wide range, it is kind of too late to get proper and confident signals on 4 Hrs and on daily time frames. 1 Hr chart supports swing trade ideas better. And as you see, Ichimoku works on all time frames. Of course the best is when you have multi time frame Ichimoku signals which stregthen each other.
The charts are: 4 Hrs Ichimoku, 4 Hrs with Heiken Ashi, 1 Hr Ichimoku
Daily chart I did not attach this time, as that is clearly bullish, with lot of support levels lower and with no real chance for a break or a bearish reversal.
The current bullish move from the lows was pretty impressive and very quick. SP500 is about to reach the top of the trading range. What we have to start watching now is where it will print the next high close to 1900, well actually if we can see a higher, or a lower next local high compared to the previous all time high on the 4 Hrs time frame.
Anyway I would not be surprised if we see some correction today down to 1865-1870 levels. Slow Stoch is overbought and turning lower again after this strong bullish march, and we may see the first red Heiken Ashi candle as well. 1865 is important as there is the Kijun line too. If price can not pop up from there again gaining back the bullish momentum, then as you can see on 1 Hr time frame it can easily become more than just a 10-15 points pull back. With a 1 Hr chart Kumo break and additional Ichimoku sell signals it could be hit lower to next possible support of 1850-1855.
The difference now compared to previous breakdown in early April is that the 4 Hrs Kumo is pretty far below price and it is thick enough, so very likely even a bit bigger correction would be bought first ard 1840-1850.
This means even if we see some sell signals, either position sizes should be limited to half unit on shorts, or the stop loss has too be very tight. Be cautious with bearish trades, but be a lot more cautious with bullish bets! :-)
Generally I like to sleep well, so what I like to do here is to open very small outright short + buying some Put options and Put spreads for June maturity. Who knows, maybe Puts can work a lot better in time with less stress. And as you may have already realised I am kind of strategic bearish for equities at these levels, so I rather look for short opportunities.
p.s.: the reason I have been looking at 1 Hr time frame recently is that since equity indexes are trading in a wide range, it is kind of too late to get proper and confident signals on 4 Hrs and on daily time frames. 1 Hr chart supports swing trade ideas better. And as you see, Ichimoku works on all time frames. Of course the best is when you have multi time frame Ichimoku signals which stregthen each other.
