Premium Members Harmonic Trading Charts for SPY


Can SPY die?  There is heavy confluence merging at the 175 region, a wedge resistance line, Pitchfork midline, a 113% extension and AB=CD target.  So when there are 4 different means of finding one level … it creates a wall of resistance which offers a probability of rejection.  Since the markets offer no guarantees, probabilities offer the best edge.  However, when price comes to a wall of resistance (or support), and price does not reject that level, it makes a huge statement.  Keep in mind, it’s one thing for price to breach the wall (to peek to the other side per say), it’s another thing to hold beyond it.


10-20-2013 SPY D MTS


 There are several clues suggesting at the least, that a pullback is in order, one, a wedge formation at the top of a run, this is often an indication of losing ground.  Another clue is momentum is totally contracting into the opposite direction, and also one of the best visual indications of a stall or pullback time is when faster moving averages (like for instance 20 and / or 50) are very far from price.


 Currently the only Harmonic Patterns setting up are ABCD’s, this is what occurs when higher highs keep forming in upside impulsive moves.  However, there is a potential Shark or 5-0 attempting to form, but until a rejection of the resistance occurs, price may not be finished with this move to test levels here.



What to do with this information?  There’s a potential breach of 174.51 to test the ideal ABCD target 175.98.  This is not the area to be initiating a long position, conservatively speaking, a better setup is a close above 175.98 followed by a resistance test to eliminate a fake breakout.  Yeah … this is where patience comes in.  If you’re already in a long position, due to the confluence and clues, don’t allow a winning position turn into a losing one, so this is a good time to take some profits or protect some profits.



As far as a counter-trend trade setup, a hold below 175.98 or 174.51 offers a short opportunity.  The other option is to go to a smaller timeframe and seek a setup from there.  Here’s an hourly chart:



10-20-2013 SPY H MTS


Note there was a previous high at 173.52, a conservative approach for a short opportunity is wait for a close below and followed resistance test of that level.  Yep … again patience is a requisite.  The reason the conservative approach is suggested, especially if you’re new to trading or seeking a strategy, is because price could just be stalling between 174.51 and 173.52 until those hourly moving averages get closer to price.  After all, there was a bullish cross and so far the retest of those moving averages have validated the cross.