Look Out Below if this Simple Support Level fails for the SP500

Dec 10, 2014: 5:46 PM CST

The S&P 500 has retraced quickly to a known support target and we’ll focus on this current confluence level with great interest.

Let’s highlight this level and plan a pathway if buyers fail to intervene here as they’ve done in the past (on the weekly chart).

A simple plan would have us focus on the 2,020 highlighted confluence of the September price high with the rising 50 day EMA.

You can actually see recently how price has broken under the 50 day EMA for a continued retracement (August and then October).

Simply stated, our focus should currently be on the 2,020 for a bounce-rally or support-break sell-off.

While 2,020 is important on the Daily Chart, a more important level emerges from the Weekly Chart:

The rising 20 week EMA aligns with the 2,000 “Round Number” level which – arguably – is more important than the current low near 2,020.

I drew green arrows to highlight prior touches or “tests” of the rising 20 week EMA where buyers intervened as they found a spot to buy into the rising support floor of the moving average.

The one exception (from 2013 to present) was the October sell-off that took price sharply lower toward the next logical target – the rising 50 week EMA then near 1,875 (the closing low).

Intervention occurred and price surged once again to new highs to continue the stimulus-fueled uptrend.

The question now is whether buyers will once again stop the sell-off in its tracks at or  near these logical support levels (2,020 initially then 2,000) or else whether they’ll let the market shake out once again to trade down to the lower support confluence near 1,940.

To be clear, the 1,940 downside target develops from the overlap of the rising 50 week EMA (1,922) and the rising 200 day SMA (1,945).

For now, concentrate your attention and real-time trades near 2,020 and 2,000.

Afraid to Trade Premium Content and Membership

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


2 Responses to “Look Out Below if this Simple Support Level fails for the SP500”

  1. Dec 11 Power Rally Intraday Update and Stock Scan | Afraid to Trade.com Blog Says:

    […] 11 Power Rally Intraday Update and Stock Scan Dec 11, 2014: 1:57 PM CST Right on cue, and directly from the key confluence level I highlighted yesterday, the bulls intervened to thrust this market higher again with a sharp retracement swing […]

  2. Morne Says:

    Trading with Support lines in mind is very important since it could help make great profits but if we trade without any proper planning than we could really end up in serious losses. I always trade with keeping all these things in mind. I trade with OctaFX broker and their easy service like low spread of just 0.2 pips, high leverage up to 1.500 and others benefits which really trading so much easier for me and it automatically brought profits.