Daily Open Air Buy Signal for the SP500 Developing

Sep 9, 2013: 10:49 AM CST

In an update to August 26th “Weekly/Daily Planning for the SP500” post, we’ll take a look at today’s initial upside breakout and buy-signal trigger for the Daily SP500.

We’ll need to watch this initial breakout into the close and whether the market can hold above the key level through the rest of the week.

We’ll start with the Daily Chart EMA and Price Resistance Breakout Signal:

SP500 Breakout Buy Signal above Resistance Trendlines Moving Average Trading Tactics

If we look exclusively at the Daily Chart, we would see a confluence EMA (20 and 50 day) breakout above a key resistance level (it was the June 2013 swing high) into what’s known as “Open Air,” or a pocket on the chart for which there is no known or simple overhead resistance zone.

The breakthrough above a confluence resistance tends to generate an influx of capital into the market due to buyers entering (putting on new positions or adding to existing positions) and also sellers exiting (buying-back to cover for a “short squeeze”).

As long as this supply/demand dynamic continues, price tends to move higher through “Open Air” toward the next upside target which is the 1,700 “Round Number” level.

Note the positive momentum divergence into the September low on the 3/10 Momentum Oscillator – an early signal of potential reversal.

As mentioned in the late August Planning Update, the Weekly Chart simply shows a pro-trend bullish ‘flag’ or retracement trade already in motion:

SP500 Weekly Chart Bull Market Uptrend trendline buy signal breakout trend continuation bull flag

Then as is the case now, price retraced logically toward the rising 20 week EMA (1,635 level) and reversed higher in the current potential upswing through “Open Air” toward the 1,700 level.

If this does indeed continue, it would reinforce the primary and intermediate up-trend (bull trend) already in motion.

For this week, we’ll continue putting the Daily Chart potential Breakout Buy Signal in the context of the Weekly Chart pro-trend retracement and focus our attention on the current 1,660/1,655 level.

We’ll be on guard for a “surprise” bull trap reversal back under this level (invalidating the breakout buy signal) or else a continuation swing or movement toward – or perhaps above – the prior 1,700 level for ‘bigger picture’ chart planning.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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3 Comments

3 Responses to “Daily Open Air Buy Signal for the SP500 Developing”

  1. Quick Planning the Key SP500 Trade Target Levels to Start the Government Shutdown Week | Afraid to Trade.com Blog Says:

    […] can start our study with a review of the September 9th “Daily Buy Signal for the SP500 Developing” which incorporates similar Weekly/Daily Chart integration for trade planning (the market […]

  2. Quick Planning the Key SP500 Trade Target Levels Says:

    […] can start our study with a review of the September 9th “Daily Buy Signal for the SP500 Developing” which incorporates similar Weekly/Daily Chart integration for trade planning (the market […]

  3. Quick Planning the Key SP500 Trade Target Levels to Start the Government Shutdown Week | manufacturer blog Says:

    […] can start our study with a review of the September 9th “Daily Buy Signal for the SP500 Developing” which incorporates similar Weekly/Daily Chart integration for trade planning (the market […]