the S&P 500/SPY has been showing an increase in volatility lately, and SPX futures tonight appear to be setting up to test lower. On the 4hr chart, the 200ma (circles) is acting as support, however there is sell pressure building with the development of a bearflag, and we are testing the lower end of a support zone below 2745. The Twiggs Money Flow above the chart and VZO-PZO below have been consolidating and are testing support once again. If/when these break down and the support zone on the price chart is lost, a short opportunity will present itself. The more conservative entry would be below the 200ma around 2741. I am comfortable taking an entry anywhere below 2745 with a stop between 2755.1-2763.5, however, if price struggles to close above the red 50ma on the 4hr, a 2nd short entry could be considered. 2700-2710 or so has been well established as support in the recent past, so this will be my primary target. This trade could take a number of days to develop, but the ideal entry may come tonight or tomorrow during RTH. If we see consecutive bullish 4hr closes above the 200ma, the trade should be abandoned. I've marked a few zones on the chart where, if breached, my stop will be trailed to B/E (2717.6) or further to lock in profits (2710.6), whereas if price builds a bullish pattern and reverses out of these zones, I will consider exiting the trade and potentially switching biases in order to ride price action bullish back to my entry.
Trade closed: stop reached:
Nailed the analysis, but embarrassed to admit I got shaken out early rather than moving my stop like I planned...Followed my trading rules, but learned I need to utilize the timeframe I based analysis on and not doubt the plan based on smaller time frames. We should know by tomorrow (or whenever we break today's high or low) which direction we head next. I have a few bullish swing trades, but plan to ride the SPY either way tomorrow.
Trade closed: target reached:
That should read TARGET reached haha