S&P 500 – False Break Setup Profits | May 20

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S&P 500 – False Break Setup Profits, ST Mildly Bearish (1hr chart)
Yesterday in the daily trade setups commentary, we talked about being bullish on the S&P 500 and looking to buy on a pullback. One of the key levels we were looking to get long was the 2125 role reversal level.

After consolidating just above this level, the US index broke through, but then formed a false break setup immediately closing back above.

As I’ve said before in the course, false break setups are more common and tend to have a greater edge when trading with trend. I jumped on this right back at the 2125 level, and as you can see form the chart below, hit my profit target of 2133 which is 80 points on a 25 point stop, so a quick +4R.

Kudos to the FOMC peeps and the boost they gave it, but what is interesting to note is after hitting the recent highs, it did an about face and slammed lower, taking out this level in a jiffy.

It has briefly touched the next key support level at 2118 while continuing to pressure it during Tokyo trading, so quite a volatile session.

For now I’m staying flat but if I can see some stability and rejections here, I’ll consider getting long during early NY trading.

Breaking and closing below 2118 suggests further unwinding with 2110 and 2097 on deck.


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