Today on twitter we observed how the Low of the Day came in at the 88.6%XA retrace on the daily chart.

We’ve posted this chart last week,  but here’s the updated chart :

Last week we also mentioned that a bounce up to 202 would be of significance, and could either be the start of a new pattern higher, or a lead to breaking the lows.  On an increasing Put/Call ratio, it did just that. Which resulted in an AB=CD on the 60min chart :

Last Friday’s 4PM 60min candle, closed decisively below the PRZ.

Today the retrace continued with more Put buying in the morning, right down to the 88.6%XA of the daily chart. the last 60min candle today was a qualified break of the supply line.

Also in the later part of the day we saw Call buying picking up, although on the day the P/C is still in favor of the bears at 55.1.

On smaller Timeframes we observed the start of a CD leg higher, as alerted on twitter.

 

Now, this is a perfect example of a high probability setup : start CD leg of a new XABCD pattern, where the A is at the PRZ of  an opposite pattern.

Other parameters in the equation:

• diverging Gr8pressure at or near 25 at the A point, and higher at the C point, where Gr8pressure uses the bar setting equal to the amount of bars between Point A and Point C. (anyone tried any other oscillator by the way?)
• Call buying increasing and more then Put buying around Point C

The 113%XA proofed to be resistance and yet again shows you the importance of tightening up stops/taking profits at XA levels.

Does this mean this is a turning point and we can expect some retrace of the leg down?

In the previous chart i adjusted the parameters on the yellow indicator to reflect what we saw at that time.

following is what I will observe tomorrow:

In order for a continuation higher I want to see it stay above the entry for a probable down leg, which as you can see is right inline with the B point of the blue pattern, 191.5 – 191.6

Obviously, if above the 113%XA, then observe subsequent XA targets. For the possibility for a longer duration of a move higher, I would need to see it recapture the PRZ of the 60min chart, +/- 193.25.

Another possibility for a quick trade was alerted on NFLX, mentioned at around 11:35. from about 114.4, with target PRZ 117.23.

Didn’t quite make it, but reversed at the 78.6, still good for a small profit. Just like SPY another opportunity presented itself in the last hour when the possibility of a new pattern emerged.

PRZ is at 117.52, so if it can break above, then we can look at the XA levels for targets.

 

Today’s OptionFlow: