Quick Upside Resistance Levels to Watch on SP500
As we move up off the key “Edge of a Cliff” level – 1,040 – in the S&P 500, let’s take a quick look at the reference levels to watch as potential resistance on the S&P 500 on the bounce.
The most obvious overhead level for a short-term ‘make-or-break’ level is again 1,110.
You don’t have to get fancy to know that – we hit that level two times recently after the May low and buyers failed to push the index beyond that level – thus, it is the key for now.
If you do want to get fancy, though, 1,110 is the 38.2% Fibonacci Retracement (1,108 actually) and 1,108 is currently the very important 200 day SMA – which we’ve also tested twice and failed to overcome.
Should buyers jam the index beyond 1,110, then it would likely create a quick “Short Squeeze” or popped stops breakout situation that could quickly send the index to any of the following upside targets:
1,120 (50 day EMA)
1,130 (50% Fibonacci Retracement)
1,150 (61.8% Fibonacci Retracement and key price level)
To make it abundantly simple, the pathway forward (in terms of reference levels) seems to be:
IF above 1,110 THEN expect 1,150
IF under 1,110 THEN expect 1,040
Basically, what that says is that we remain in a short-term trading range between 1,040 and 1,110. The range will continue to hold until we get a breakout – and we will – in either direction, which should lead to a continuation move.
Reference the following prior updates:
“Bulls Willing to do Anything to Avoid Falling into the Abyss”
“Third Time’s a Charm? SP500 Tests Line in the Sand”
S&P 500 Poised on the “Edge of a Cliff”
Edge of Cliff Level to Watch in the Russell 2000
And for the reason why we watch key levels:
“So… Why Exactly is Technical Analysis Important?”
Be safe.
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade
Agreed
You are spot on about 1,110, Corey!
One thing I find interesting is the fact that price is forming a bearish candlestick right at this zone, which also coincides with the bottom of the monthly pivot range for June at about 1,101. In a down trending market, pull-back to the pivot range are seen as selling opportunities.
Therefore, if price cannot close above 1,110, we could easily see another test at 1,040…
Cheers!
Frank
Excellent way of predicting future ..