Just a quick note. Here is a setup you can make over and over.
- A market tests support several times. The more times a level is tested, the more likely it is to break. Also, notice the lower highs into the level. (This is the opposite of price rejection.)
- Support breaks and the market trades lower.
- Short on the retest of previous support.
This works over and over, in all markets and all timeframes. In this case, it gave our desk a good bias below this 120.70 level on the SPY today. (This was also the 1202 level I tweeted this morning.) This is a good, simple setup that everyone can make part of their trading plan.
4 Comments on “A simple setup”
Seems like the point of Wed & Thur was to train traders to buy the opening so they could feed the bears today.
Isn’t this some variant of the pattern known as “descending triangle” ? Anyway, I agree with you that this setup is very useful and powerful these days.
Also works on the up side as well.
would entry on short on retest of previous support or break of new low (~120.25) be better?. how about exit plan?
Another great post, thanks Adam 🙂