Index seemingly forming a nice, even rounded top (a reversal formation)
What I particularly like about this one:
It's nice and even
It has been building for quite some time (4 months)
It is built around a fresh historical high (this makes it more relevant)
It completed yesterday a few points off the critical MA200 support
It contains symmetrical breakouts (green circles) and breakdowns (red circles) on either side
It completes at the end of the week and just before a major catalyst (elections)
The index is down 7 sessions out of the previous 9
Of those, the past 6 have been sequential down days
We are now approaching oversold territory ( <30) but not dramatically
Expect some "breathing space" ahead of the week-end
Expect a break below the MA200 and rounded top neckline (2,082) some time next week
If the support is broken, expect further downside
Potential rebound to 2,122 from here (+1.6%)
Main support at 2,082
If broken, head straight to 2,074 and then 2,063
HOW TO TRADE
Buying SPY puts
Stopped exactly on the MA200 (critical support).
Tomorrow's elections to "make or break the index".
Stating short for now - Make your bets.
Direction and timeline as expected, however.
Judging by the futures, today is when the index breaks to the downside.
Expecting the S&P to trade below 2,080.
Short index, long vol and long gold should pay.