SP500 – SELL – 28th July 2020

SP500 – SELL – 28th July 2020 (Closed)

Good afternoon team,

The White House is currently debating a fresh stimulus package which is estimated to be in the region of $1 trillion USD. This is likely going to be the last economic rescue package before the November election campaign. However, unemployment benefits are set to be slashed from $600 to $200. This is facing large push back from the Democrat party. Some Republicans are against providing any further stimulus as they are wary of spending any additional money. There appears to be a divide between the Democrats and Republicans.

What we do know is US equities need stimulus to keep them afloat. If the market does not like the size or the outcome of the stimulus package we could see some pull backs.

Looking at the technical side of things, the SP500 has created an interesting setup with a nice risk v reward ratio.

SP500 – 1 Hour Charts

There has been a break down from the rising wedge formation. The market has now retested the broken wedge and created a potential head and shoulders formation.

We are now looking to enter a short position expecting a break down below the shoulder line towards 3150.

Trade Setup: SELL Market Execution, current price 3240, stop loss 3285 and take profit 3150.

Stop loss: 45 pips

Take profit: 90 pips

IF the market breaks back into the wedge formation this set up becomes invalid and we will close out our positions on the SP500.

Price of the SP500 may vary depending on who you trade with.

 

Trade Setup
SELL - Market Execution

Entry
3240

Take Profit
3150

Stop Loss
3285