I have identified the resistance area for Dow Jones Index as indicated on the chart. At this moment, the Dow looks to be testing the support turned resistance area at 12000pts which it fell through earlier this week. If it failed to clear this resistance area, look for the Dow Jones index to drop.
Same goes for the S&P500 chart: The S&P500 had closed with a long tail candlestick which signal that it is already at a potential area of resistance where more selling took place than buying. Look at its doji like candlestick close on friday.
How do trade this setup?
I bought the SPXU (Proshares UltraPro Short S&P500 ETF) on Friday. This ETF tracks the movement of the S&P500. If the index drops, the price of this ETF will rise in value. I ideitified this trade as a low risk trade as i figured that the big drop sustained by the financial market would trigger a wave of selling and this is just the beginning of the move. I am wrong when my stop loss placed at the blue spot is triggered. I am very bearish on the market at this moment and believe that we should sell into the rally as it nears the resistance level.
Same goes for the S&P500 chart: The S&P500 had closed with a long tail candlestick which signal that it is already at a potential area of resistance where more selling took place than buying. Look at its doji like candlestick close on friday.
How do trade this setup?
I bought the SPXU (Proshares UltraPro Short S&P500 ETF) on Friday. This ETF tracks the movement of the S&P500. If the index drops, the price of this ETF will rise in value. I ideitified this trade as a low risk trade as i figured that the big drop sustained by the financial market would trigger a wave of selling and this is just the beginning of the move. I am wrong when my stop loss placed at the blue spot is triggered. I am very bearish on the market at this moment and believe that we should sell into the rally as it nears the resistance level.
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