The SPY weekly is setting up what I call the 2c-2d setup (basically a reverse divergence in a bullish trend, as indicated by the 20- & 50-MA's). So, when identifying a 2c-2d setup, I look to the faster time frame (in this case the daily) for an entry which usually comes in the form of the 3d criteria, and low and behold, that's what we have:
-The weekly came into a support zone in the form of the 38.2% retracement that also happened to be the 50-week moving average.
- When noticing the 3d criteria I look to the left, identify a 3a, and that gives me my resistance zone; or where price may likely encounter, well, resistance. This is indicated on the daily chart, and happens to line up with the 50% Fib. retracement as drawn between recent lows and the May highs.
After identifying this setup I look for a price pattern that looks like 3-pushes to a low or an inverse Head & Shoulders. From there I then draw a Fib. projection off of the seed wave to attain price targets. The seed wave will likely be the low of the inverse H&S's head to the high preceding the most recent higher low, make sense? This seed wave is only a potentiality because we don't know yet whether the lows are in, but that is what gives us our Risk:Reward profile.
So, here is a closer look at the Daily chart
The rounding aspect of price can be highlighted by tracing out these symmetrical cycles a-la John R. Stevenson
The setups I include on this blog are used in conjunction with the 3/10macd and the criteria I ascribe to it as a way to alert me to an existing condition of price. The key concept to take away from this blog is that I try to anticipate what will happen on the higher time frame by using a faster time frame to trigger the trade setup. I do not trade a "system" I use two indicators to clue me in to price conditions. Please read the Disclaimer located in the sidebar of this site. I can be contacted via email at firstname.lastname@example.org
I am always open to questions, comments, or suggestions on how to improve this blog.