Thursday, August 5, 2010

Expanding Triangle with Time Fibs

This is something I have been playing with the past few days. A very unlikely scenario but one that could be used for a trade with a limited amount of risk. Why limited?

So take a short at those levels (anywhere from 1140-1150) with a stop around 1180. If market keeps on trucking towards 1170, double down on position there and get out on retracement (you dont need much of a retracement to exit position at break even or with small loss).

If the market retraces back towards 1100, then it gets a bit tricky. Depending on how it bounces (likely back to retest 1130) and how the coming rally will resolve technically one can make some great calls on whether this pattern will come true. On break you can double down on your position likely around 1080 with a stop at the recent rally high (the rally off 1100).

This could turn out to be an extremely low risk trade with a potential for some really nice gains. As this is a longer term trade you can start position sizes quite small without too much pain if we are wrong.

In terms of giving this pattern credit here, I would say maybe 3 out of 10, so its not something I feel quite strong about but the risk/reward makes this a bit more interesting.

Also take a look at the time relationships here - from top to bottom, 38% hit the first top, 61% could be inline with our upside targets towards next week right between 1140-1150.


  1. Where did you go...the market is a falling and no comments?? hope you are on vacation having fun.


  2. heya Kat, I just arrived in the UK yesterday and was sleeping while the market was having a field day. Another day and I am back to normal. I am actually looking for a long position possibly today in the morning hours with continuation of yesterdays sell off. USDJPY is finally lining up for a potential bottom (after my previous tries) and this would fit very well with another tradable bottom in SPX.

    I may try to post up some charts tonight =)