This week Allison Ostrander, Director of Risk Tolerance, shares a bearish trend pattern that sets up potential traps for bulls when price is trading near the 100 simple moving average (SMA).
Allison graduated with a Bachelor of Fine Arts degree in Theatre and learned to trade to avoid being a starving artist while pursuing theatre. She now has over a decade of trading experience and a unique view of how to look at Capital Risk, the Charts, and the Option Chain.
With SPX attempting to break above the 100 simple moving average (SMA) currently, let’s review a setup to watch, both for the market as well as individual symbols, if SPX starts to fail at the 100 SMA.
In the video above, Allison walks through a potential trap setup for bulls. This occurs when a chart is in a bearish trend and price attempts to break above the 100 SMA. If price fails and drops below the 100 SMA, does a second retest, and cannot break above the 100 SMA, this is a potential trap for bulls. Allison will review her tweets warning followers of these traps as well as the current charts for new setups to eye.
You’ll hear Allison discuss the Divergent Bar indicator in the video, her proprietary indicator used to identify if you will see a potential higher high or lower low within the next three bars. When the setup discussed creates a Bearish Divergent Bar holding the 100 SMA as resistance, it can make for a great short entry.
May the trade be with you,