Price is close to a historical high.
I think the price can make a powerful drop down if there will be fake broke of 2940
Potential profit will be in 10 times bigger than a risk
Push like if you want to get a safe entry point
This is a pattern seen many times. A new ATH and shallow pullback, a second failed attempt to make the high, and a deeper (ie 10%+) correction. The time of year and macro sentiment is right. 2012 predicts two attempts to break 2885, then a summer fade to 2918 (50% retrace).
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SPX500 labeled in a Leading Diagonal within Intermediate (1) (blue), with a bearish sequence expected to start unfolding.
Diagonal can still perform one more leg on the up-side, however, a breach of the lower trend-line (blue) would invalidate that scenario.
Follow up to my previous post when SPX topped, see link below.
The 9.618 extension is a very common Murder of Moves.
It already rejected, and day after was Trump-China escalation.
Thus the Gap down, which gave me another Impulse/fib to map.
Now I look for Confluences of the two Fibs pushing in opposite directions.
Blue arrows are possibilities implying sooner...
1. I will open buy if the price will make a pullback to 2860
Because there is a huge chance that it will happen
The goal will be before historical high 2942
2. Near 2942 I will open Sell if there will be a fake broke
Mostly price bounce 1st time from such powerful levels
In that situation potential profit could be in 10 - 20 times bigger than a risk
Now a couple of weeks ago, maybe a month ago. I sent out the long term analysis on what the heck will happen with SP 500. Told all LEH traders to use the calculate the stop loss of 300 pips accordingly towards their account amount. This is the best trade for the year so far. I didn't expect it to drop so fast, assuming it will take at least a couple months before...
Part of my ongoing study of Fibonacci Extensions and their relevance to all Assets.
The 9.618 is a particularly interesting extension, quite often the ender of Moves.
Confidence in this plot can be measured by the number of EXACT hits on fib ratios.
Was it the End of the Trend, or just a Bend?
Of course I have no idea what will happen.
But IF an End, that was a...