Quick Charting the SP500 Range Breakdown

Jan 24, 2014: 11:45 AM CST

As a follow-up to yesterday’s post “Respecting the Range While Awaiting a Breakout,” let’s take a look at how the range boundary came into play yesterday and more importantly, on the “expected” breakthrough of the range boundaries.

Here’s a quick chart of the @ES S&P 500 e-mini futures for reference:

ES Futures e-mini emini Fibonacci intraday day trading chart

From yesterday’s post, I referenced the 1,815 level which was the 38.20% Fibonacci Retracement as drawn.  That level was yesterday’s low and price rallied up 10 points higher off this levels as buyers/bulls rushed to “defend the range.”

However, overnight news activity resulted in an opening gap UNDER the 1,815 reference level and the outcome has been a ‘collapse’ of price as the expected breakout from the range occurred this morning.

It led to an immediate push toward the first target – 1,805 – and now price has fully achieved a distant target into the 61.8% Fibonacci and declining trendline as drawn (1,797).  This was also the level I highlighted to members of the Daily Reports.

We set the structure and game-plan the same way with respect to the challenge of the 1,797 target level – we’ll be ready to trade any bounce here intraday or else look for additional ‘collapse’ impulsive downside action (as buyers continue to liquidate positions) underneath 1,795.

The price levels are similar – but not identical – in the actual S&P 500 index seen below:

S&P 500 SP500 Intraday chart Fibonacci Retracement

For those who follow the S&P 500 index, the reference level is even simpler – 1,800.

Today’s update, along with yesterday’s “planning piece,” serve as a great educational reference of planning and real-time activity.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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