deeper: Yes Im looking to keep some and add more on bounce/retracement to this short. The downtrend is established, this is not over. More than 50% retracement with a couple of days action to the upside on volume would contradict, till then sell into strength. Looking at 131.5 and the blue area. However with this heavy volume and momentum it is likely to have a brief consolidation and break further down towards 126 and 121 when panic kicks in. Those price levels are historically important
It is a long way up there, there is a lot to prove. Personally I do not think it goes that high, retest of 136-137 area is more likely. Again nobody has a crystal ball so we will see, small positions and tight stops till there is more clarity on direction. Technically we are still on a downtrend the current counter trend is still just a bounce/retracement. If we break through 133 - 34 on heavy volume I would reconsider my position, if light volume takes us even to 136ish I remain on the short side. No volume = no conviction even with follow through.
Since it could not hold above 133 it is still on sell signal, today (23rd candle) on 4h chart there is a bullish engulf signal this cautions me to wait for a better price to short, at the same time we could not make new high and the low is lower which breaks the bounce. Wait and see at the moment. I have a very small short on FB but no position against SPY at the moment.
Looking at all four signals to evaluate the probability of a good entry: 1. above/below cloud 2. above/below Kijun-sen 3. above/below Tenakn-sen 4. Chikou above/below price history. So I count how many of them match, say 3 out of 4 can still be a trade if other indicators look promising (see later). 2 out of 2 I would be cautious, with smaller size or not to trade it at all. One signal is obviously no trade. I look at multiple timeframes, if they conflict I prioritize the higher one. Cloud has utmost important to me, trying to avoid trading in the cloud on daily. I also look at volume and momentum indicator, lately I prefer BB% for that. for targets I use cloud shadow and Chikou but also take into consideration key levels such as fibonacci and gaps if there is confluence I prefer that. I generally do not use crosses as they are lagging.
Thanks for the breakdown - very helpful and interesting. We are similar in approach in mnay ways and I have toyed with blending Ichimoku with some other traditional indicators with some success such as ADX and OSMA. When trades run heavily in my favour I agree that crosses are very lagging and I have been using Parabolic SAR as another option to trailing a stop. You can never stop learning in this business. Much appreciated