$SPY | The Trend Is Your Friend: Why NOT To Short Just Yet!
While I remain bearish on SPY in the long term, today I purchased calls at market open today while a lot of other traders that I know shorted the market. Additionally, I see a lot of SPY short ideas on the ideas page right now despite the fact that price is clearly making a bullish correction to the upside within in a rising channel . I want to share my perspective on the stock market and explain why I believe SPY can continue to move upwards to $269 or maybe even $276 in the coming weeks.
If you look at the rising channel that price is currently trading within, then you can see that price is clearly higher highs (HH) and higher lows (HL) — which is by nature the definition of a bullish trend .
If I have learned anything while trading stocks it is that the trend is your friend. You are much more likely to catch a winning trade by following the trend rather than trying to trade against the trend.
We will assume that SPY will remain bullish as long as price continues to print higher highs and higher lows (it would also be nice to see it remain inside of the channel as well).
Today, price printed a higher low directly at the support of the channel prior to the move up. If we follow the trend, we should expect price to print a higher high next. Furthermore, we can see that price broke out of a lower timeframe triangle consolidation to the upside and made a quick retest of structure which gives further reason to long.
Assuming price breaks the current highs, My initial target will be the $269 level based purely on horizontal market structure looking left.
If price continues to move upward, I will target $276 because of the significant degree of confluence that this level presents. First, at this level we have a very narrow zone of convergence between the 50% and the 61.8% Fibonacci retracements of the high time frame bearish impulses. Furthermore, we can use the projection of an impulse to estimate future price targets. If you look at the red elements, you can see that by projecting the "AB" leg from the "C" point, then the "D" point becomes the target of our AB=CD harmonic pattern . Interestingly, the “D” point here seems to line up perfectly with the fib confluence zone.
TL; DR , price is moving up within a clearly bullish channel . Price is clearly trending up as it prints higher highs and higher lows. More often than not, you will find greater success when trading with the trend rather than trying to trade against it. There are some really interesting levels of convergence at the proposed take profit levels. I will be looking for short opportunities once if price reaches them.
If you look at the rising channel that price is currently trading within, then you can see that price is clearly higher highs (HH) and higher lows (HL) — which is by nature the definition of a bullish trend .
If I have learned anything while trading stocks it is that the trend is your friend. You are much more likely to catch a winning trade by following the trend rather than trying to trade against the trend.
We will assume that SPY will remain bullish as long as price continues to print higher highs and higher lows (it would also be nice to see it remain inside of the channel as well).
Today, price printed a higher low directly at the support of the channel prior to the move up. If we follow the trend, we should expect price to print a higher high next. Furthermore, we can see that price broke out of a lower timeframe triangle consolidation to the upside and made a quick retest of structure which gives further reason to long.
Assuming price breaks the current highs, My initial target will be the $269 level based purely on horizontal market structure looking left.
If price continues to move upward, I will target $276 because of the significant degree of confluence that this level presents. First, at this level we have a very narrow zone of convergence between the 50% and the 61.8% Fibonacci retracements of the high time frame bearish impulses. Furthermore, we can use the projection of an impulse to estimate future price targets. If you look at the red elements, you can see that by projecting the "AB" leg from the "C" point, then the "D" point becomes the target of our AB=CD harmonic pattern . Interestingly, the “D” point here seems to line up perfectly with the fib confluence zone.
TL; DR , price is moving up within a clearly bullish channel . Price is clearly trending up as it prints higher highs and higher lows. More often than not, you will find greater success when trading with the trend rather than trying to trade against it. There are some really interesting levels of convergence at the proposed take profit levels. I will be looking for short opportunities once if price reaches them.
İşlem kapandı: hedefe ulaştı:
Hey everyone, I published an updated analysis where I maintained the same bullish sentiment overall, but I identified alternative areas of market structure based on fibonacci levels and fresh price action. Price moved up exactly as forecasted in the updated analysis and my long target was achieved in both.
I’ll mostly be watching price action during the next few days for opportunities to short the market in anticipation of continuation of the major bearish trend. However, until I see strong confirmation of a bearish reversal I remain bullish as the minor trend has been bullish since March 24. Additionally, today we had a break and retest of the $260 level. This could be a short squeeze (My current thought) or a simple trend continuation pattern based on the concept of structure breakout & retest.
Check out my updated analysis of the S&P 500 Index here:
If you find my ideas valuable please let me know by leaving a like or a comment!
I’ll mostly be watching price action during the next few days for opportunities to short the market in anticipation of continuation of the major bearish trend. However, until I see strong confirmation of a bearish reversal I remain bullish as the minor trend has been bullish since March 24. Additionally, today we had a break and retest of the $260 level. This could be a short squeeze (My current thought) or a simple trend continuation pattern based on the concept of structure breakout & retest.
Check out my updated analysis of the S&P 500 Index here:
If you find my ideas valuable please let me know by leaving a like or a comment!
