Well that was interesting – the S&P 500 so far has played ping-pong between the 200 day SMA at 1,115 and the 50 day EMA at 1,094.

Let’s look closely at these two levels which have become almost exactly today’s high and low price.

Today underscores the importance of watching key daily moving averages in your intraday trading.

On the current down-swing, you can know in advance that there may very will be intraday support at either the 20 or 50 day EMA, which rest at 1,089 and 1,094 respectively.

You can set-up trade targets to play intraday swings to these levels, and then look to see if you can trade long for a potential bounce – particularly if you see little divergences or other buy-signals – which occurred at 11:00am CST.

So that takes care of short-term support, but what’s also quite interesting is that this morning’s pop-up gap paused and formed the intraday high at 1,115, which happens to be both the 200 day SMA (1,114) and the 50% Fibonacci Retracement (1,115).

That could have prevented you from rushing in to buy the market this morning until we cleared above 1,115  – which we did not.  No break, no buy.

On the down move, price found support at the 50 day EMA.

This is a great example of how intraday traders can use simple reference levels off the daily chart to enhance intraday trades.

So the market must either break above 1,115 – triggering a wave of “Popped Stops” and a short squeeze, or it must slice through support at the 1,090 level.

One of the two will happen now – it can’t stay between 1,115 and 1,100 forever!   Be prepared.

Corey Rosenbloom, CMT
Afraid to Trade.com

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