US500 SMART MONEY PLAY Smart Money Play for US500
The setup suggests a potential for continuation in the primary uptrend but warns of possible near-term exhaustion. This strategy focuses on monitoring support levels during a pullback to position for a high-probability entry in line with the trend.
1. Identify Key Support Levels for Potential Pullback
• Daily HVN Nodes: The daily HVN nodes at 5831 and 5710 represent strong support zones. If price retraces to these levels, they are likely to act as points of buying interest, especially if aligned with bullish indicators on lower timeframes.
• 4-Hour Ichimoku Conversion Line: Currently, price is testing the 4-hour Ichimoku conversion line. A sustained hold at this level would signal a continuation of the uptrend, while a breakdown could open the door for a deeper pullback.
2. Monitor ADX and DI for Trend Continuation or Exhaustion
• Daily ADX: With an ADX of 22 and positive DI above negative DI, the daily trend is bullish but not overly strong, suggesting room for a potential continuation if support holds.
• 4-Hour ADX: The 4-hour ADX at 50, with the ADX line well above both +DI and -DI, indicates possible trend exhaustion. This level, combined with bearish divergence on the RSI, suggests that a pullback or consolidation phase is likely before the trend resumes.
3. RSI and MFI as Momentum Indicators
• Daily RSI: The daily RSI at 66 remains bullish but could retreat to 50-60 on a pullback while maintaining trend strength. A hold above 50 on the daily RSI would support re-entry at a favorable level.
• 4-Hour MFI: With MFI rolling down from 80 to 74, it signals a reduction in buying pressure, consistent with an expected pullback.
4. Short-Term Signals on Lower Timeframes
• 2-Hour MACD: The dark red bearish signal on the 2-hour MACD is an early warning for a short-term correction. If MACD starts to turn green after a dip, it could provide an entry signal.
• 4-Hour RSI Divergence: Bearish divergence on the 4-hour RSI further supports a potential pullback. Waiting for a correction here before entering would minimize risk.
Trade Ideas
1. Pullback Entry for Long Continuation:
• Entry: Consider entering long near the HVN nodes at 5831 or 5710 if price stabilizes. Look for bullish signals on the 2-hour or 4-hour MACD and RSI to confirm that buyers are returning.
• Stop-Loss: Place stops just below 5710 to account for volatility but avoid exposure if the pullback deepens.
• Target: Aim for an initial move back towards the upper Bollinger Band on the daily (around 6000+) or even higher if the trend resumes strongly.
2. Alternative Short on Short-Term Weakness:
• Entry: Consider a short position if price fails to hold the 4-hour Ichimoku conversion line, aiming for a target near the daily HVN nodes (5831 or 5710).
• Stop-Loss: Tight stop just above the recent high at 5973, minimizing risk.
• Target: Look for a retracement to the 5831 node, where support may resume.
Summary of Smart Money Play
1. Trend Bias: Bullish overall but with caution for near-term exhaustion.
2. Setup: Wait for pullback confirmation to key support for a low-risk entry.
3. Entry Trigger: Use MACD and RSI on lower timeframes to confirm a resumption of buying pressure on pullbacks.
4. Risk Management: Stops below support for long positions and tight stops above recent highs for shorts, targeting the daily upper Bollinger Band on continuation or HVN nodes on retracement.
