SPY Triangle Apex Test and Breakout Example Apr 5

Apr 5, 2010: 3:35 PM CST

Today was the successful resolution of a short-term pattern that formed in the SPY intraday timeframe, giving us a great example of a symmetrical price triangle breakout, move back to test the apex (breakout zone), and the profitable move that resulted.

Let’s see the example and where we are currently:

This is perhaps one of the best recent examples of a short-term (roughly 1-week) index symmetrical triangle that formed, broke out, came back and re-tested the apex, giving a great buying opportunity at the $117.50 level for those willing to take the small-stop risk under $117.00.

This is a great example of the “Range Alternation Principle” as well as a triangle price breakout that provided a second-chance clean entry long (given that the trigger – the breakout – was a gap).

It makes a great difference if you internalize patterns and study them closely when the market provides good examples of these classic patterns and trading signals.

Put your own spin on the pattern by using the methods/techniques in your trading arsenal.

Stepping back in time, we see what the pattern looked like as it formed:

This is the exact 30-min chart I provided to subscribers (with commentary) on Thursday’s Daily Commentary Report.

I had been highlighting the triangle formation for the prior two trading sessions and mentioning that a breakout was likely the next play to expect.

Thursday’s bullish breakout gap gave us that action… but more than that, it gave us a nice, clean retracement to test the “apex” or breakout point of the triangle.

In addition, it formed a nice long-legged doji candle (two actually) then a strong bullish breakout bar.

The best trade set-up came as price broke above the doji candles at the $117.50 level if you were willing to hold long over the holiday weekend and Friday Morning Jobs Report – most intraday traders do not do so.

Still, this serves as an excellent example of how structure from the higher timeframes ‘bleeds down’ to the lower timeframes, and how set-ups on higher timeframes provide opportunities for intraday traders.

This is the type of analysis I provide for subscribers in the second half – the “forecasting tomorrow” portion – of the Idealized Trades membership.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

4 Comments

4 Responses to “SPY Triangle Apex Test and Breakout Example Apr 5”

  1. Name Says:

    ……….

    The best trade set-up came as price broke above the doji candles at the $115.50 level if you were willing to hold long over the holiday weekend and Friday Morning Jobs Report – most intraday traders do not do so.

    …. should be $117.50 instead of $115.50 , right ?

  2. Corey Rosenbloom, CMT Says:

    Thanks for catching that!

    Yes, I corrected it.

  3. Name Says:

    ……….

    The best trade set-up came as price broke above the doji candles at the $115.50 level if you were willing to hold long over the holiday weekend and Friday Morning Jobs Report – most intraday traders do not do so.

    …. should be $117.50 instead of $115.50 , right ?

  4. Corey Rosenbloom, CMT Says:

    Thanks for catching that!

    Yes, I corrected it.