XLP Scoop Pattern

Today as of 11:00am ET we have a large green candle. If we close over the 8ema (orange) then we will have formed a "Scoop" candlestick pattern. This is a very bullish pattern. It starts about 12/15/16. See how from that date to 1/6/17 it is a sideways handle followed by a dip or a little cup? That looks like a ladle or a scoop. Also, yesterday was a doji and we gapped up today. A gap up after a doji is also a bullish signal.

The DI+ crossed up over the DI- indicator. This is a supportive signal.

To be conservative, I should wait until the close today and make sure we don't retrace all the back to the 8ema or lower. But the scoop pattern can result in an explosive move, so I'm going to be a little aggressive and get in now (mid-day).

So, I got some March 52/54 Call Spreads for .84. I chose March to reduce Theta time decay and give myself some time if I need it. An option spread, versus a simple option, helps with the Theta decay since you're selling an option as well as buying one, but it doesn't eliminate it. I chose the 54 strike because 54 is my short term target. The maximum risk is the cost (premium) of the spread. The maximum reward is the width of the spread, which is 54-52=$2. So the reward to risk is better than 2:1.

I chose a target of 54 because of 2 reasons:

1. The measured move is the length of the previous wave up. The previous wave up is from point A to point B. The thick white vertical line is the same length, drawn from the bottom of the scoop.
2. There is resistance from August right at 54. See the thick white horizontal line.

I'm using a stop of 51.25 on the XLP stock. If price gets down there then its below the scoop and that's a bearish sign. I'm using a Limit Sell order for the option spread of .15. If its worth less than that, I'd rather hold it for a possible reversal.

Of course anything can happen, and we have the Trump inaugural on 1/20/17 which could ruin the pattern, but my biggest technical worry is the 200SMA (Simple Moving Average; white meandering sideways line). That will probably provide some resistance. I'm planning on a small pull back when price hits it at about 53, then we reverse back up and go through the 200SMA and on up to the target at 54.