krugman25
Long

XLF - Falling wedge breakout buying opportunity

AMEX:XLF   SELECT SECTOR SPDR TRUST AMEX FINANCIAL SELECT INDEX USD DIS
**Market Structure**
-A falling wedge has broken
-Due to the price rise going into the wedge as well as the downward sloping nature of this wedge , that gives is a solidly bullish bias
-The overall markets have been bullish and we could see the tide lifting all ships higher

**Trading Tips**
-A bearish pinbar has formed on the daily so we may see price drop lower in the near term
-I expect the overall bullish picture to stay intact, and so any push lower may be met with strong buying
-If price does drop lower to retest the upper channel of the falling wedge , using this price action information ( bullish trend , bullish pattern breakout), it may create a high probably buying opportunity

**Trading Ideas**
-This ETF could be purchased outright right now for a decent risk/reward setup
-If you are willing to wait and see if price falls it may offer a better entry point, at the risk of missing the trade if it doesn't fall
-The price target is the peak of the pattern @ $30 so different ways to get long this trade are to buy the stock outright, create a synthetic long position buy selling a put and buying a call at the same strike(about 1:5 leverage), or selling a vertical put spread for a defined risk trade
Comment: Sold a synthetic long stock split strike. This creates a synthetic long position by selling a put and buying a call, but the put strike was sold at 28 and the call was bought at 28. This means the potential loss if price fell to 27 is small, at the expense of giving up a little bit of upside profit. My risk reward is around 1 to 4, for every dollar risked I stand to make 4.
Trade active: Sold a synthetic long stock split strike. This creates a synthetic long position by selling a put and buying a call, but the put strike was sold at 28 and the call was bought at 28. This means the potential loss if price fell to 27 is small, at the expense of giving up a little bit of upside profit. My risk reward is around 1 to 4, for every dollar risked I stand to make 4.

Stop loss is if price breaches back within the falling wedge and profit target is $30.
Comment: Expiration for this synthetic long stock split strike is 51 DTE.
Oh my gosh. ya need to start a hedge fund. ;) haha. sweet analysis bro. if it is the late contraction stage of the economic cycle, like I would assume, it should go up. Next phase is early expansion, where technology and transports go up. I got all this from a mean reversion theory by Roger Scott. He sounded really smart the way he explained imbalances in the market and how they revert back to a mean.
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@biggair, I just trade the price action. I don't look at news, or theories or anything. But I wouldn't doubt it! haha
+1 Reply
@biggair, Haha, the hedge fund may come someday. I just have to keep making good predictions for a few more years.
+1 Reply
expiry?
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krugman25 judejames
@judejames, 51 DTE. Thanks for the reminder, I will add it to the comments
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judejames krugman25
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