More Divergences and a Price Planning Grid for SP500

Jun 12, 2015: 12:04 PM CST

Intraday divergences have been very helpful lately for calling intraday reversals in the stock market.

Today’s session is no exception as a negative divergence yesterday suggested a bearish reversal today, which is how the market opened this morning.

Let’s learn from these divergences and plot a “Price Level Planning Grid” over the current landscape.

We’ll start with the @ES Futures (S&P 500 e-mini):

For reference, be sure to start with a couple of posts this week regarding the real-time divergence:

“Trading the Expected Bounce Rally off Support”

“June 11 Market Update and Stock Scan”

Both of these charted the divergence – and real-time planning – as it occurred.

Now, we can focus on the lessons to learn and apply our knowledge to future situations like this – and profit!

A positive Breadth Divergence took place early June 9th on a powerful reversal up away from the 2,070 level.

From there, price traded toward – then slightly above – our 2,100 @ES target.

Another “V-Spike” or price reversal took place on a Negative Divergence through yesterday’s session.

Today, we’re seeing the logical downside break and sell-swing action “down away from” 2,100.

Divergences often – though certainly not always – forecast short-term reversals.

With that lesson in mind, we have a level planning grid for the current structure:

Our Fibonacci Retracement Grid shows key levels into 2,100 and 2,086 and the market has probed just beyond these levels yesterday and today.

Our focal point right now should be the 2,085 @ES level as a pivot, making us “bearish” on a movement down away from this level or “neutral bullish” on a bounce up off this level.

Make note of the divergences and these levels as we plan and trade the remainder of today’s session.

Afraid to Trade Premium Content and Membership

Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.

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).

2 Comments

2 Responses to “More Divergences and a Price Planning Grid for SP500”

  1. Silva Says:

    The person who is able to spot the reversal correctly, it’s definitely pretty good for him, but if we are unable to do that then we will find it tough. I am trading with OctaFX broker where they have cTrader platform, it’s really amazing because of been highly upgraded with all the latest technology, upgraded charts and super smooth trading platform where every trades is opened instantly without ever having to face any delay or requotes, so that gives me really bright chance to succeed.

  2. Zafar Says:

    It looks pretty complicated stuff, I think we got to be really clever with working out these things; it is only than we will gain profits. I am lucky enough to work with OctaFX broker since with them, I am able to gain profits regularly following their daily market news and analysis service, it is easy to follow yet highly effective and is completely free too, so this is just the stuff one needs in order to succeed even in confusing situations.