I don’t usually post trades in hindsight. But mentioned two SPY trades past 2 days on twitter, that worked out well. And can serve as good examples on how we use the Harmonic indicator for weekly option trades. Specially for the members that have signed up recently, this would be a good example on how we’re scanning for reversal trades, using Harmonics. There are several posts on the website on Harmonics and the indicators we have programmed for Stockfinder, so if you’re new to the website, I recommend you start reading those posts first.
Read the weekend post prior to this.
In the weekend post we pointed out that 207.88 and 207 would be important levels on the 60min chart; below the 207.88 level could be a start of a new CD leg lower. Keep that in mind. And we also know that on that same 60min chart, SPY completed an AB=CD, with the “D” at 209.74.
If you enter the A,B, and C values into the calculator, (free for members) you see that we have one more PRZ level just above the D at 210.54. So therefore our PRZ range is from 209.20 up to 210.54
Following are the various charts, in sequence, as of yesterday.
Monday started with an AB=CD within a XABCD pattern (blue) on a 2min chart. It couldn’t break above the PRZ, and subsequently pulled back within a XABCD pattern (yellow)
Both these two smaller patterns were contained within a larger pattern, visible on a 5min chart:
Monday afternoon we called it out on twitter and entered into a weekly 208 call trade at $1.38 per contract, just after the bounce between the 88,6%XA and the AB=CD PRZ. There wasn’t much time left in the day, and we were able to sell most of the calls at $1.65. Nothing to write home about, but nevertheless a successful trade.
Due to this afternoon bounce, the BC leg shifted. My indicator always defaults to the most recent qualified BC leg within an XABCD frame. so therefore the bounce yesterday, now became the new BC leg, as depicted below.
The corresponding PRZ started with a 200%BC projection at 207.82. Lo and behold, the first 5min bar started a new bounce of this level to the penny. Subsequently it fell down into the PRZ, and held on to the “D” for three bars, before extending to the lower PRZ level at 261.8%BC, now within 2pennies. Which at the same time was in very close proximity of the 161.8%XA level.
note, how the ranges of each bounce were equal in size, this happens a lot, and can be used as another confirmation for a reversal, once this range gets surpassed on a subsequent bounce.
If you remember, we mentioned that the 207.88 level on the 60min chart was of importance. Therefore since this 5min PRZ was just below 207.88 I decided instead of taking a call trade at the PRZ, to wait and see if it could recapture this 207.88 first.
At first we got a confirmation by means of a XABCD on a 1min chart, starting a CD leg higher:
But that was still below the 207.88
The second little pullback offered this opportunity, where the C point was at 207.87, so we entered a call trade right after a break over 207.88, just seconds before it surpassed the CD entry and subsequently exploded higher. This resulted in a 100% gain, up to the 200%XA level.
called the time of entries and exits on twitter.
So at the close of today the SPY is right back inside the PRZ of the a fore mentioned 60min chart. TD pressure is neither oversold nor overbought. Therefore we have no other choice then to switch our bias back to neutral, and we simple have to wait, observe the PRZ levels and see if new patterns develop.
updated 60min chart :
Optionsflow, today’s at or above the ask trades in dollar value.