Right now I am focused on the hourly chart for the SPX. I have also rearranged my trading desk layout to better monitor the dollar, EUR/USD pair, and the mini contracts for the major indexes. The arrangement allows me to view trends of each in several time frames at once (specifically daily, hourly, and 15 minutes). Open the hourly candlestick chart for the SPX:
Looking at the hourly chart of the SPX, we see more evidence of a possible double top. Price action failed to reach yesterdays intra-day highs and of course we set new intra-day lows for the first time in over a week. We see a very nice local double top with floor formed today and yesterday - setting up a nice resistance point at 096ish to contain the next reaction high. Another important feature is that we have broken all the support levels from the reaction highs of the last rally leg (formed on October 18,19, 21, 23, and 26). There is no real support until we reach the "Pivot Zone" down around 072 (extending to 058ish).
My guess is that we will trade within the containment zone 096ish to 072ish during the next session or two. There is a lot happening within this zone and we must watch price action carefully. My plan is to sell the rallies whenever price moves up through one of the red lines on the chart. For example, if price action rises to or slightly above 096 tomorrow, I will add to my short ES line. The same applies for each subsequent retest of a red line once price passes through it on the way down. Judging from past price action, we will see the 50p MA which is near the 38% retracement of this last rally leg at 076ish. We may not get a bounce here as some would expect. Reason being that I have noticed forceful breaks of the 50p MA by price action during these pullbacks. Rather, I think we may see a direct run to the 068 level - wich is the 50% retracement of the last rally leg and a major break of the bottom BB. If this happens, we may see a strong bounce and retests of the various red lines.
If this is a major double top we will need to see a break of the 1029 floor. A break of the 029 level would be the first time in the last 8 months that a reaction low broke the level of a prior reaction low. If this happens - look out. We will see the 9 handles again.
Anyway, thanks for the kind sentiments for Trisha - she is home recovering as I type.
Good luck with the markets!
7 comments:
David , glad to here Trisha is doing well, family as always is the real deal.
I think today was a wave 4, if that is the case we have one more trip to the top the lane to go.
My wave 3 was 59 points , so 1083 would be .38 retrace.
A sharp crisp blowoff Monday- Tuesday , would sure be a nice end to the long story.
My Best
Payline,
All is good, thanks.
I am very confident that price action will be contained within my "containment zone". I think we have seen the high for the year and I welcome a nice strong sell-off to 067!
shorted and covered a bit. Possibly should have covered a bit more. I have one very illiquid short that I may be erring in setting up
Oh, probably should sign via my old moniker.
KPH
Hi , David , your Zone was spot on today.
I am really likeing your Double Top , It seems very possible that my waves 4 and 5 are really 1 and 2.
Monday should make it clear . 97 up new high Breaking 86 , sends us down . am I close ?
My Best
David , there is a new down channel , This time I see it :)
thanks for you help
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