This Is the Easiest Chart of the Year.
I mean that.
Look at what SPY is doing right now. It is moving inside a clean descending channel. A descending channel is when a stock or index makes a series of lower highs and lower lows, bouncing between two parallel downward sloping lines.
Upper perimeter around $690. Lower perimeter around $645 to $650. Every time price touches the top of that channel, you short it. Every time it touches the bottom, you buy it.
That is the trade. That is all it is.
I know the headlines are screaming. War, oil, Fed uncertainty, every pundit on television telling you something different. Ignore it. The chart is not screaming.
The chart is actually one of the cleanest setups I have seen this year. Price is moving in a defined range and it is telling you exactly what to do at every turn.
We have been doing this for weeks. Short the upper perimeter. Buy the lower perimeter. Seven straight winners in Trade to Close doing exactly that.
But Here Is What Most People Are Getting Wrong
A lot of traders think we have already seen the worst of it. We have not.
Capitulation has not happened yet. Capitulation is not a bad week. It is not a 5% selloff. Capitulation is the moment when everyone who has been holding on finally gives up at exactly the same time. You see it on the chart before you feel it in your stomach.
A serious gap down on massive volume.
A gap down is when price opens significantly lower than where it closed the previous day, leaving a visible empty space on the chart. Fear everywhere. Every indicator screaming oversold.
Oversold means the market has fallen so far so fast that sellers are exhausted and buyers historically step in.
Historically, true capitulation bottoms have one thing in common. Nobody wants to buy. The news is catastrophic. The charts look like they are going to zero. That is when the crowd is most wrong. That is when you step in.
We are not there yet.
My scrappy target on SPY is around $640. But if we get real capitulation, it will go lower than that. I cannot give you an exact level until I see the gap down.
You cannot measure capitulation in advance. You can only recognize it when it arrives.
Here is what I think happens. We get one nasty gap down. Then another one after that. Those two candles are your signal. That is when the crowd is at maximum pain and the setup flips from short to long.
What You Should Be Doing Right Now
Stop trying to predict where the bottom is. That is hopium. Trading on hope instead of reading what is in front of you.
The bottom is wherever the market decides it is, and no one knows when that is.
What you can do is trade the channel. The rules are simple. The perimeters are clear. You have one job. Decide how much you want to put on. Then let the setup do the work.
Enter the zone, buy the zone, sell the zone.
That is exactly what we have been doing in Trade to Close every single afternoon. Seven straight winners. Out of 137 total trades, 98 winners and 38 losers. A 72% win rate.
If you had risked $1,000 per trade, that would be $23,723 in profits. If you risked $10,000 per trade, that is $237,237.
The easiest chart of the year is right in front of you. The system to trade it is already built.
Rock On,
Voz
P.S. When capitulation finally hits, it happens fast and it is ugly. The people who are already watching the levels will be ready. The people watching the headlines will miss it. Stay close.