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From SPX chart daily, you can see that the index traded within narrow range and has formed Inside Bar with lower "High" and higher "Low" from previous day, which gives opportunity of breakout strategy to be traded tomorrow.
Inside bar happens when we have power struggle between Bulls and Bears, when neither side has a strength to push the price in the direction they wanted. Usually this power struggle last one day. So the very next day if the bulls outnumbered bears the price will go higher, and the opposite, if bears are, then price is going lower.
For tomorrow Tuesday 10 August 09, the entry criteria will be:
High: 1010.12
Low: 1000.99
Range: 9.13
Long entry price: 1010.13 (one penny above the high)
Stop Loss at Long: 1000.99
Profit target : 1019.26 ( 1010.13 + 9.13)
Short entry price: 1000.98 (one penny below low)
Stop Loss at Short: 1010.13
Profit target: 991.86 ( 1000.99-9.13)
The 4 Day Rule: We count the Inside Day we are using in the setup as Day 1.
Whether or not the price hits our targets, we exit the entire position on Day 4 or the
close of Day 3. If it takes to long to hit your profit target then the market might just gone into consolidation in which we would not like to find ourselves.
Tomorrow`s breakout will be probably news driven, so get up half an hour before market opens an catch the whole swing in whichever direction
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