A is for Awesome – The retest variation sell
Its been a week of shitty waiting, but it paid off to plan the trade and trade the plan. Mark my card down for 4/4 wins on these (admittedly correlated) trades.
It goes without saying that using the zero made it easier to stick to the plan. Even though I don’t personally use it for my entries, I use it to time exits and I find it WITHOUT PEER! Its the cat’s ass, you should subscribe to it.
All setups should have made more than 1R, so stops should be at breakeven or better.
Now the driver of all this is the obvious resolution of the triangle in $spx.
What story is price telling here? Well after August-November of clearly corrective price action, if the bearish thesis is valid we should see the downward trend reassert itself with undeniable force.
After the resolution of the triangle we have increasing downside breadth and range, indicating that this move is accellerating, not decellerating to the downside.
Odds at this point heavily favor further downside, as bulls should jump now their case is disproved, adding to selling pressure, driving this fucker down.
We *should* see some weeks of downside here. The weekly retest variation sell has been triggered, and although I’m not fond of targets, it is not unreasonable to target 1020 $spx here.
You read right! 1020!
Now ANYTHING AT ALL that does not look like a straight downshot, this makes the bearish case very very stinky.
Why? Well no bulls in the world could possibly argue that the last 2 days is bullish, therefore bulls en masse will be selling their holdings. If that additional selling pressure is NOT ENOUGH to drive price down, the market is giving us a powerful clue that there is no bearish outcome in our future.
As usual, staying unbiased and objective is the way forward.
p.s. Here is the Retest Variation Sell rules, for your reference.
Retest Variation Sell (reverse for buys)
1) Significant high.
Definition: The highest high in the most recent 10 bars OR a bar that
breaks a previous SPIKE HIGH OR applying common sense a high that looks
significant to an educated trader.
Definition of a SPIKE HIGH: Bar that makes a high with a lower high
immediately before and immediately after it
2) One or more lower closes (lower than the close of the previous bar)
Clarification: this lower close CAN happen in the same bar as the
significant high. (eg the dow jones at the ultimate GFC lows, attached)
3) One or more higher closes (higher than the close of the bar that made
the (2) close
Condition: Must be within 5 bars AND NO MORE of the significant high.
Condition: Must NOT break the significant high (although if it does it
becomes a potential fakeout sell)
Sell 1 tick below the break of the low that completes the setup (3) with
a stop 1 tick above the high of the bar that makes the setup