www.scottpluschau.blogspot.com
First let me say that it is great to be back at the helm going into next week.
The last time the S&P 500 had any pattern worth mentioning it was the "Ascending Triangle" pattern that developed over a week in early August; see one hour chart left hand side below. There was a sign of potential capitulation from the shorts when a spike high came through the daily chart's bullish parallel rising channel, see right hand side below. The "Measured Rule" profit taking target captures nicely the shorts being flushed out and the longs ringing the register.
I am going to show multiple charts to keep them as clean as possible. I am using a one hour chart at first to fit in the previous price action and drawing.
The ascending triangle shows increasing demand with each selloff. This can be seen by the rising trendline on the one hour chart below. If you are a bear or short, and the market will not go lower and take out a previous "swing low", your side is weak, and in futures the weak get hunted down by the strong.
(Click on charts to expand)
What development is there now? I am keeping my eye on a "Descending Triangle" going into next week, see left hand side 30 min chart below. There has been demand at the 1,395 level and a sign of increasing supply with each rally failing to take out the previous high. A breakdown here and a secondary target becomes the lower trendline of the channel on the daily chart, right hand side below.
The bulls should still be shown respect with the larger degree timeframe in a bullish rising channel. The rising channel in the daily timeframe shows increasing demand from longer term traders. What that means to me, is I would be conservative with any quality short trade setups, and do not marry them.
Going into next week I am looking for a short below 1,395 the way it looks right now. Otherwise I am comfortable on the sideline. Trading inside this range in the meatime would be flat out guessing with my methodology, and I have no "edge" guessing. Other potential trade setups will be to the long side above 1,410 in the smaller degree timeframe. I know what I am looking for, and I will be ready to strike when presented with a favorable trading opportunity. Position sizing continues to be "conservative".
When might I begin to get "moderate" or "aggressive"? When the probabilities for success increase. That time will come.
An email update on the new service was sent to potential subscribers yesterday and another will be sent later today. Next Sunday August 9th, a new journey begins. Will you be joining...
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Source: Chart to keep an eye on (S&P 500)
