Saturday, April 20, 2019

SPY & QQQ Buy and Sell Zone Example

Buy and Sell Zone Explanation Example

Buy/Sell Zone - Setup
  • Zones can be used for 3 setups: Pullback to the zone, a break through the zone and go, or a Reverse Side Entry (gap over a zone and reverse side pullback - zone was once resistance and now its support) using a candle stick entry for each setup.
  • First step is to find a buy/sell zone by examining the 30 and 15 minute chart's from prior days. The zone will be formed near a intraday move and or break point and that not been retested with a pullback.
  • The 30/15 minute chart will usually show the move and will use the 5 and 1 minute chart to fine tune the top and bottom of the zone. 
  • The bottom of the zone will consist of a rejection area (pin bars) and or consolidation/base where the move starts. The top of the zone is where the sharp move took place and will be marked with the break of the Open price on the first red candle that started the sharp move up, when going long. 
  • Stop are placed outside of the zones or the bottom of the 15 minute candle.
SPY  Sell Zone Pullback: SPY trend has been bearish, and a strong sell off the prior day setup a nice SELL zone. At the open the SPY gaped up and traded into the sell zone, and proceeded to sell off. enter the low of the 15 minute candle with stop at the high. If the SPY had gapped over this zone,  I may have considered a Reverse Side Entry on a pullback, with a candle confirmation, and a rising 20ema 
 

QQQ Zone Break Through & Go: QQQ is trending up, gaps up and opens in a prior sell zone. QQQ proceeds to trade through the zone - catching shorts and anyone shorting the R1 pivot and looking for new highs. Exit goal is the R2 pivot- stop low of the day/low the 15 minute candle.

Example of Drawling a Zone for a short entry / Sell Zone: Identify the candle where the sell off starts. Next is to identify the green candle prior to the sell off and mark the OPEN on the candle, this marks the bottom of the Zone. Top of the zone is a base of candles that have rejected a price point. Below is an intraday Sell Zone example with a 15 minute chart. Once I find the zone on the 15 minute I fine tune with the 5 and 1 minute chart.


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Disclaimer

I DO NOT MAKE RECOMMENDATIONS TO BUY OR SELL SECURITIES - I JUST POST TRADES I MAKE OR FIT THE RULES OF MY TRADING PLAN ON A DAILY BASIS. DO YOUR OWN DUE DILIGENCE - YOU ARE RESPONSIBLE FOR YOUR TRADES, INVESTMENTS, AND DECISIONS! ALL CHARTS COURTESY OF TRADESTATION, SCHWAb & TD AMERITRADE