SPX bearish breakout trade plan.
Here's an estimate of how I think a SPX break may be likely to form and the spots at which I am looking to trade into it.
Phase 1 - Chop/whipsaw
Will be cautious in the first days. I am going to be taking short positions into rallies with tight stops but I expect to see mostly a range with false moves to both sides early in the week.
Phase 2 - A spike low turning into a short-term bear trap.
My first short target area. Next bearish breakout area and probably a place I'll take short-term buys.
Phase 3 - A sharp rally.
I'll be looking for the first move to be of a parabolic nature. Some momentum push through. A range in at the highs of this for a while and then a short coming. Around 4485 I plan to be building a short. If this happens.
Phase 4 - The bigger fall to 3330
First major signs of a bear break. Will be a confirmative marker in my bear plan if I see this.
Phase 5- The bigger bull trap rally.
Similar properties to phase 3 but a bigger move correcting the recent fall.
Phase 6 - The real trade.
If these things happen, I plan to be building my short position around 4430 and this is where I expect the real short trade to come from. I'll update analysis if we get to this point.
All of this is valid while SPX trades under 4570. Needs reviewed if this price hits.
Phase 1 - Chop/whipsaw
Will be cautious in the first days. I am going to be taking short positions into rallies with tight stops but I expect to see mostly a range with false moves to both sides early in the week.
Phase 2 - A spike low turning into a short-term bear trap.
My first short target area. Next bearish breakout area and probably a place I'll take short-term buys.
Phase 3 - A sharp rally.
I'll be looking for the first move to be of a parabolic nature. Some momentum push through. A range in at the highs of this for a while and then a short coming. Around 4485 I plan to be building a short. If this happens.
Phase 4 - The bigger fall to 3330
First major signs of a bear break. Will be a confirmative marker in my bear plan if I see this.
Phase 5- The bigger bull trap rally.
Similar properties to phase 3 but a bigger move correcting the recent fall.
Phase 6 - The real trade.
If these things happen, I plan to be building my short position around 4430 and this is where I expect the real short trade to come from. I'll update analysis if we get to this point.
All of this is valid while SPX trades under 4570. Needs reviewed if this price hits.
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