Jonny.Pro

16/9 Market Recap

BATS:SPY   SPDR S&P 500 ETF
99 0 1
Hello Traders! This week was quite a bumpy one. We started with a gap above the all times high, an opening pattern that a lot of traders see as a trusty buying signal, just to see the prices drifting back below the high. One thing to mention about that pattern is that the retracement volume wasn’t that significant - a situation which can imply that this retracement is not a shift in sentiment but a profit taking one. On Wednesday we had a great pop up of the market in the midst of the day, following a statement from the FED. If you read carefully our prior blog posts, you must have noticed that we use a proprietary indicator called Pivot Break, developed by ProTradingIndicators.com.
This indicator and a lot of others, are always present on our charts in order to capture and identify high probability levels where the market has the potential to make a substantial move in a short period of time. For now, ProTradingIndicators.com has published 3 indicators on the TradingView platform but there is more to come. You are more than welcome to visit our website and get acquainted with the variety of indicators we have to offer. Regarding the market’s price action of last week, If we would plot an indicator name Pivot Break on the 10 minute chart, we would have noticed that there are two green lines drawn on Tuesday and Wednesday. These lines represent a level where if the price trades over that price level, we can probably expect a significant move on that same direction. The line on Tuesday got breached, and looking into the volume and overall volatility, we can observe that this breach was not accompanied by much of enthusiasm. Therefore, if we did buy at $171 (Where the green line was drawn) we would probably put our stop below the previous low of $170.80, and eventually get out of the position close to the end of the session. We really don’t like positions that don’t show any action right away, and the reason is that this behaviour might give us a hint that the level on which we were counting on to be a special level, wasn’t so after all. In these cases just close the position and move on, there’s a lot of opportunity out there and we don’t want to lose time neither want to let our money sleep in a useless position. On Wednesday we saw another green Pivot Break line being drawn just about the $171.15 level. Again, prices trading higher than this line indicate a bullish sentiment and a high probability of the prices moving higher. During the day prices only backed away from the line, but the line stayed at the same place and didn’t change color. The implication of that is that the signal is still active. If the prices were to come back, close to that line we would have taken that position. Finally, slightly after 02:00 pm, there was a major pop in the market, the market not only popped up with a high volatility, but also with a significant volume , indicating that the move is backed up with a lot of participants. Given that information we would be at ease in letting the profits run up until the close, at around $173. Placing a stop below the previous low of $170.75, would yield a profit of $1.85, giving a Profit/Loss ratio of beyond 4.5 which is a great ratio!. Although it is recommended to use this type of strategy when the underlying asset is in a general trend - As the market is right now in an uptrend - there is some traders who use it on smaller time frames in order to catch small and fast profits. Economic Calendar: As you know, it always important to be aware of the special economic events due on the trading week:
Sep 24 @ 10:00 AM Consumer Confidence.
Sep 25 @ 10:00 AM New Home Sales.
Sep 26 @ 10:30 AM Natural Gas             Inventories.
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