Hello traders!
As stated in our previous post, linked in the description, we are following two main scenarios on S&P500.
According to the bullish scenario, the 5 waves labeled in the chart should form a leading diagonal for wave i of C in a primary wave (B) to the upside targeting 4300+. In this case we should now retrace in wave ii of C.
According to the bearish scenario, that movement from december's low would be a triple three correction in wave 2/B and thus we may reverse in a wave 3/C aiming to lower targets (3640 big wolfe wave target) or possibly lower lows. See the chart below
We managed to catch a short entry at @4076.1, and we are going to hold it (stop loss on entry) following this plan:
-if prices arrives to the 3900-3940 area, which is a target in both scenarios (and wolfe's wave target), we will close at least half of the position. At that point we will evaluate whether the decline is impulsive (motive wave) or corrective( three waves). In the former case, once it extends lower and if actvivates the red ascending broadening wedge creating a 5-waves pattern, we will search for adding a short at the retracement. In the latter case, we will evaluate bullish setups around the 3900 area for the green arrow path in the main chart, possibly keeping a piece of the initial short to be hedged for both scenarios.
- If prices spikes up and kicks us out at entry, we will reevaluate a short position around the 4125-4135 area, for a completion higher of the above mentioned leading diagonal, ad apply the same plan to the new short.
As we explained before we believe that fundamental news and events unfold simultaneously with the price action, and all the information available is encoded in chart patterns. Nonetheless, it is clear that the FOMC will bring high volatility, so it is important to reduce risk and have a clear plan prepared.
Will update below, happy trading ;)
As stated in our previous post, linked in the description, we are following two main scenarios on S&P500.
According to the bullish scenario, the 5 waves labeled in the chart should form a leading diagonal for wave i of C in a primary wave (B) to the upside targeting 4300+. In this case we should now retrace in wave ii of C.
According to the bearish scenario, that movement from december's low would be a triple three correction in wave 2/B and thus we may reverse in a wave 3/C aiming to lower targets (3640 big wolfe wave target) or possibly lower lows. See the chart below
We managed to catch a short entry at @4076.1, and we are going to hold it (stop loss on entry) following this plan:
-if prices arrives to the 3900-3940 area, which is a target in both scenarios (and wolfe's wave target), we will close at least half of the position. At that point we will evaluate whether the decline is impulsive (motive wave) or corrective( three waves). In the former case, once it extends lower and if actvivates the red ascending broadening wedge creating a 5-waves pattern, we will search for adding a short at the retracement. In the latter case, we will evaluate bullish setups around the 3900 area for the green arrow path in the main chart, possibly keeping a piece of the initial short to be hedged for both scenarios.
- If prices spikes up and kicks us out at entry, we will reevaluate a short position around the 4125-4135 area, for a completion higher of the above mentioned leading diagonal, ad apply the same plan to the new short.
As we explained before we believe that fundamental news and events unfold simultaneously with the price action, and all the information available is encoded in chart patterns. Nonetheless, it is clear that the FOMC will bring high volatility, so it is important to reduce risk and have a clear plan prepared.
Will update below, happy trading ;)
Trade active:
Plan executed. Previous position closed on entry and short from @4129.6. Our bias is for a wave ii of C coming after leading diagonal.
Trade active:
Stop loss is 4186 for risk 1.5%.
We plan to diminish exposure soon since the risk reward to the downside decreased after invalidating the bearish scenario. We should then be into a an ABC to the downside with two possible counts:
still in wave 1 of C
wave 3 of C
We plan to diminish exposure soon since the risk reward to the downside decreased after invalidating the bearish scenario. We should then be into a an ABC to the downside with two possible counts:
Comment:
Referring to the previous comment, *we should be in ABC to the upside in primary wave (B) targeting 4300-4500
Trade closed: stop reached:
Bullish
it may decrease a bit now, but we follow the rules and we are out. loss 1.5%
