Game Planning the SP500 with a Repeat Pattern

Aug 11, 2014: 10:53 AM CST

I wanted to highlight a “Repeat Pattern” in the S&P 500 that can help us now in planning the next swing.

Let’s take a look at the pattern and set our targets for planning:

Note the yellow highlights when price trades down under the rising 50 (blue) and 20 (green) day EMA on the thrust back INTO the moving averages.

In February, this “touch of the 20/50 EMA from the underside” occurred near 1,800 and in April the same pattern developed near 1,850.

In both cases, we had a “make or break” situation where price either could trade down against resistance (and target the prior low) or else break above it, trigger a short-squeeze, and continue the trend toward the prior high.

Both times, the outcome was a pro-trend bullish breakout.

Now, we use the same logic into the 1,950 level where price can either fail and trade down toward 1,900 again (short bias under 1,950) or else – and perhaps more likely given the recent past and the uptrend – break above 1,950 and begin a tradable journey up toward 1,990 again.

This is a very simple way to view and plan price movement – a “make or break” level – but it could be more effective than complex planning strategies.

Look to be bullish for a repeat outcome above 1,950 or else cautious for a “pattern break” under 1,940.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

6 Comments

6 Responses to “Game Planning the SP500 with a Repeat Pattern”

  1. August 11 Daily Update and Stock Scan | Afraid to Trade.com Blog Says:

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    […] under 1,940 – as I highlighted in this morning’s S&P 500 update – could trigger an intraday reversal and bearish […]

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    […] First, take a moment to study my prior update from August 11 entitled “Planning a S&P 500 Breakout from a Repeat Pattern.” […]

  4. SP500 Decided to Break On Through to the Other Side — Trading Your Own Way Says:

    […] First, take a moment to study my prior update from August 11 entitled “Planning a S&P 500 Breakout from a Repeat Pattern.” […]

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    […] Planning a Breakout (from a Repeat Pattern) in the S&P 500 […]

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    […] Planning a Breakout (from a Repeat Pattern) in the S&P 500 […]