Quick Breakout Level Planning on Dow SP500 and NAS ahead of the Fed
The Federal Reserve announcement and press conference today could be a catalyst for a breakout of the current trading range in the stock market.
Otherwise, we’ll continue to note these reference levels, targets, support and resistance zones into our planning of the next few trading session.
Let’s highlight these levels and targets first on the S&P 500:
The trend remains bullish and a critical support level has developed into 2,070.
We’re somewhat in a similar situation to March where price was underneath the 20 and 50 day EMAs (exponential moving averages) and three spikes off the 2,050 support preceded a bullish breakout that thrust the index to new all-time highs.
Above us we have a resistance confluence near 2,100 which is a Round Number, a Falling Trendline, and the 20/50 EMA cluster.
If we make the level planning very simple, we have:
- A Bullish “Expect New All-Time Highs” Breakout Play above 2,110
- A Neutral Range/Consolidation Continuation Zone between 2,070 and 2,100
- A Bearish Breakdown/Liquidation Swing under 2,070 to target at least 2,050
Let’s chart these same levels on the Dow Jones Index:
The chart picture is very similar on the Dow Jones, only the levels are different:
- A Bullish “Expect New All-Time Highs” Breakout Play above 18,000
- A Neutral Range/Consolidation Continuation Zone between 17,700 and 18,000
- A Bearish Breakdown/Liquidation Swing under 17,700 or 17,600
Finally, the NASDAQ Index shows a slightly different picture but similar planning levels:
We see a similar falling trendline but the Daily EMA Cluster is not as clear.
Our planning parameter levels are a bit wider:
- A Bullish “Expect New All-Time Highs” Breakout Play above 5,075
- A Neutral Range/Consolidation Continuation Zone between 4,975 and 5,075
- A Bearish Breakdown/Liquidation Swing under 4,975
Whatever other strategies or indicators you are using, be sure to note these reference levels as targets and trigger spots as price moves – or perhaps doesn’t move – after today’s big Fed announcement.
Follow along with members of the Afraid to Trade Premium Membership 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).
We need to be very careful with the breakout levels, as that
get us win or make us lose which is why we have to be very careful in how we
handle it. I always prefer to trade on the support and resistance zones since
that help me get the success so much easier while having top class broker like
OctaFX is another massive help with their cTrader platform which is upgraded
version and makes trading so much easier for everyone.