Offhand, if you had to guess, based purely on the name, I bet that you would think the Separating Lines pattern heralds a reversal. After all, a separation hints at a change in sentiment, which would lead one to believe that the tables have turned. Have the bears passed the reins to the bulls or vice versa? In fact, no. The Bullish Separating Lines pattern is a continuation signal in which the bears briefly control the market before the bulls sweep in, continuing the prior uptrend.
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Rick’s Featured Trade Ideas
WIN/Long (Telecom) | J-Hook breakout | Doji back to support | Rising T-Line™
WB| Plan your trade & trade your plan | May 3, 2016
Possible entry plan idea: Buy box $8.92- $9.55
Possible stop plan idea: Protective stop below $8.64
Swing trade playground: $8.92 – $11.95 = 33%
Playground risk reward: 15:1 + depending on | entry | exit | stop
SPY: T-Line ™ chart is cracking
7:00 am: As we thought yesterday, the trend continued to slide with the SPY closing down .56% with a Doji close and now getting slightly oversold. Yesterday’s oversold doji close is very near the 50-day simple moving average and recent price action support, not to mention the 23.6% retracement line. So the likelihood of a short-term relief rally is highly probable. The $207 area remains a very important roadblock for the buyers to get through. Without $207, the sellers from the past couple of weeks remain in charge.
When a chart has been in the sellers house longer than it should have been and when it’s leaving behind a topping pattern, it requires more than just a one or two positive candle moves. We should be very careful not to get tricked into head fakes. One of the hardest things for us to learn as traders is patience — the patience to allow a pattern to form over a few days. The foundation formation is what creates a bullish run — that is the foundation for a bullish trade. As of the close yesterday, the T-Line chart continues to show that the sellers are in control.
Trading knowledge ignites successful stock trading.
All the best to your trading success!
Rick
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Rick’s Featured Trade Ideas
WB/Short (Internet Content) | Bearish “M” Pattern | 2-day Evening Star | 30-min Duce fail
WB| Plan your trade & trade your plan | May 3, 2016
Possible entry plan idea: Short box $23.85- $22.21
Possible stop plan idea: Protective cover above $23.85
Swing trade playground: $23.85 – $18.63 = 21%
Playground risk reward: 6:1 + depending on | entry | exit | stop
SPY: T-Line ™ chart is cracking
7:00 am: The T-Line™ chart continues to crack, and the bulls failed to redeem the $207 line and weakness continues premarket this morning.
“Remember that a trend will stay a trend until it’s no longer a trend.” For the past 10 days, the market has been controlled by the sellers (a downtrend), and now the $207 area is resistance rather than support. The $203 area is starting to look like the next SPY target/attempted support level, which is very close to my 23.6% fib line.
The bearish evening star that created the sellers activity was on April 20. From there, the sellers have created a lower high / lower low chart pattern that the buyers can’t seem to get out from under. Late last night I took a peek at a few indicators: TSV, MACD, OBV, Money Flow Index, and they all seem to suggest the same thing — that the candlesticks and the trend are suggesting the sellers are in town, and they’re having a good-time party. It will be important to keep your eye on the candlesticks for clues on when the buyers start controlling price. If the buyers can’t stop the party at the $203 level, then the sellers may move the party to just under $200… We’ll talk more about that later.
Trading knowledge ignites successful stock trading.
All the best to your trading success!
Rick
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Rick’s Featured Trade Ideas
EBIX/Long (Software) | Hammer/ Confirmation | Flag | Rising T-Line™
EBIX| Plan your trade & trade your plan | May 3, 2016
Possible entry plan idea: Buy box $48.15- $52.28
Possible stop plan idea: Protective stop below $49.15
Swing trade playground: $48.15 – $63.13 = 30%
Playground risk reward: 13:1 + depending on | entry | exit | stop
SPY: T-Line ™ chart is cracking
7:00 am: When you are a member of Hit-and-Run Candlesticks or Right Way Options, you learn trading techniques that are so very valuable, and you can take them anywhere; such as the meaning behind candlestick signals and patterns, the meaning by Western chart patterns, support and resistance and, of course, price action. When you put this knowledge together, you understand the importance of the $207.00 level on the SPY, and you understand the future chart patterns that could be built based on current chart patterns, candlestick signals and price action. For a couple of weeks now, we have spoken about the bullish and bearish logic behind the $207.00 area in both the morning blog post and in the trading room.
Price closed up .79% or $1.64 yesterday above the 20-day simple moving average, above the $207.00 level and even above the T-Line™. Something we have all learned about candlestick signals is that they require confirmation. Something we learn about resistance is that price action must break through it. Look at your SPY chart and draw a line from the most recent two highs.
Trading knowledge ignites successful stock trading.
All the best to your trading success!
Rick
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