The chart shows a modified schiff pitchfork based on the Brexit panic drop and assumes a pivot is "in" from Friday's close.
That is a big "if" but basis for it is:
- Weekend headlines on Brexit are thin on immediate consequences,
- Google analytics show loss of interest in "brexit", "nasdaq" and "S&P500." The later 2 don't happen when retail investors are worried about their 401Ks (see here twitter.com/codypd/s...s/746852193458786304)
- Normal impulse / correction dynamics point to a retrace once immediate impulse is over. That may have been Friday.
Point is, if SPX500 opens higher and holds, the key Fibonaccis line up very well with a flat top kumo at P3 and the 50% fib (which was predictably hit intraday on Friday) and the higher 61.8% fib lines up very neatly with a key support / resistance line from the last 2 weeks of trading. The next fib conveniently coincides with 2100 - a nice number that many will judge as a "finish line" for this event to be over.
I am expecting the 2081 fib to be where the corrective move ends. We will see - many may get FOMO and move us to 2100.
Notice the price path never hits the medial line on this pitchfork. That is my seasonal pessimism.
Keep in mind the key pivot here (P4) is by no means confirmed - this is all based on an assumption. If we open / hold lower then this plan gets thrown out.
I will trade this with some new ITM put sales on SPY and selling some UVXY puts that I already have in inventory when the key fibs are hit. I will also buy some OTM UVXY calls when those fibs are hit. My hedge are puts on USO and some drillers that I bought last Thursday - if #brexit translates into immediate recession (I don't think it does) that impact will be signalled with a decisive Oil top. Oil has already looked toppish so it was a good hedge - notice that WTI lost a greater percentage than SPX500 on Friday.
I am also researching how to trade oil volatility and may hit that topic in a separate post.
That is a big "if" but basis for it is:
- Weekend headlines on Brexit are thin on immediate consequences,
- Google analytics show loss of interest in "brexit", "nasdaq" and "S&P500." The later 2 don't happen when retail investors are worried about their 401Ks (see here twitter.com/codypd/s...s/746852193458786304)
- Normal impulse / correction dynamics point to a retrace once immediate impulse is over. That may have been Friday.
Point is, if SPX500 opens higher and holds, the key Fibonaccis line up very well with a flat top kumo at P3 and the 50% fib (which was predictably hit intraday on Friday) and the higher 61.8% fib lines up very neatly with a key support / resistance line from the last 2 weeks of trading. The next fib conveniently coincides with 2100 - a nice number that many will judge as a "finish line" for this event to be over.
I am expecting the 2081 fib to be where the corrective move ends. We will see - many may get FOMO and move us to 2100.
Notice the price path never hits the medial line on this pitchfork. That is my seasonal pessimism.
Keep in mind the key pivot here (P4) is by no means confirmed - this is all based on an assumption. If we open / hold lower then this plan gets thrown out.
I will trade this with some new ITM put sales on SPY and selling some UVXY puts that I already have in inventory when the key fibs are hit. I will also buy some OTM UVXY calls when those fibs are hit. My hedge are puts on USO and some drillers that I bought last Thursday - if #brexit translates into immediate recession (I don't think it does) that impact will be signalled with a decisive Oil top. Oil has already looked toppish so it was a good hedge - notice that WTI lost a greater percentage than SPX500 on Friday.
I am also researching how to trade oil volatility and may hit that topic in a separate post.