SPY Flag Breakout

This looks like a Flag Breakout on the SPY daily chart. The down channel I outlined is the "flag". Notice the last doji candle at the end of the down channel. There is a red candle to the left and a green candle to the right. This is known as a Flutter Kicker signal. A very bullish candlestick signal. The green candle closed outside the channel. The next day (1/5/17) was a doji. Then today we had a small gap up, and after some settling out at the open, we continued higher. If the day closes with this configuration then its a doji sandwich, which is also a bullish signal.

Some counter indicators I see are the high stochastics, decreasing daily volume, possible resistance at the previous swing high, and the fact that, as I write this (1:00pm ET), price is at the halfway point of the length of the previous wave up.

Let me explain this "the halfway point of the length of the previous wave up". See the mostly vertical, thick white line segment extending up from the most recent swing low? That's the length of the previous up wave from 12/2/16 - 12/13/16. Then, see the little, thin white, horizontal line segment cutting across the middle of the thick white line segment? That's the halfway mark. I've noticed that very often a new wave will only go half the distance of the previous wave. So I mark it off as possible resistance.

So, I wouldn't be surprised if we get a pull back, but this looks like a strong enough setup that its worth the risk.

For a target, I'm using the 127.2% Fib extension of the last wave up. You can see on the chart it occurs at about $230.86. So, to be a little conservative, I set a target of $230.50.

To control my risk I'll use a Call option. So I got some Mar 17th 232 Call options. I picked that strike price because the current Delta is about 32. I picked the Mar contract to get a lower Theta than a closer month. If I was more confident about this trade I would use a higher strike and a closer month. But because of the counter indicators I mentioned above, I want to decrease my risk.

After the last post, which was on a SPY dip, I'd sure like to show you a winner this time. But win or lose, from what I've been taught, the odds are in my favor and I have definite thought out, risk controlled plan, so let's take the trade and see what happens.