How to Win trading SPY

13 בפבר׳ 2022

SPY This drop was already expected.
I’ll explain.
We see on February 9th 3 rejections at the (0.618) Fibonacci Retracement Level.
When conducting due diligence, you would look for a previous day where SPY tested this level, on Feb 4th you see the same rejection at (0.618) and see post rejection retracement back to fibonacci level (0.5). You should have sold here, knowing a double top was potentially being formed.
—Secondly,
Spy opening red being rejected at the (0.618) Fibonacci Level was a confirmation of your double top formation thesis. Knowing this when the recovery on Feb 10th was staged and SPY briefly turned green it could have made your emotions tingle and without discipline you could have made an irrational trade which ultimately would have lost you money. We see when spy was recovering to the green it still produced a negative MACD in the 30 min. A powerful tool for short term trends indicated by the red arrow.
Following this brief recovery SPY continues downward and, in the afternoon, leaves its main channel indicated by the red lines going diagonal which provide strongest support. Furthermore, knowing the double top formation retraced back to the neckline and still wasn't satisfied as it had to fall to the baseline to be completed not the neckline. Realizing the severity of the situation you should have sold. Due to the overwhelming indicators, as well as the approaching Fibonacci Time Zone level (2), explained in the third point, a put option leading into the next day would be appropriate.
—Thirdly,
a seasoned investor familiar with Elliot Wave Theory as-well as the Fibonacci Sequence would make sure to plot Fibonacci Time Zones. Represented by the green line on the Y axis. Plotting this gives you a time frame of when to expect a reversal. As you see a reversal was inevitable, moreover it was predictable and unsurprisingly the next day SPY continued its downtrend past the neckline of the double top towards the baseline satisfying the formation.