Support and Resistance Planning to Start January 12

Jan 12, 2015: 11:48 AM CST

The S&P 500 (and Dow Jones Index) has compressed between moving average support and resistance levels.

In simplest terms, we’re waiting for a breakout of these levels to trigger bullish… or bearish… trading strategies for the next market swing.

Let’s chart these simple levels and note what’s important to watch on the chart:

Let’s focus for now only on the 20 (green) and 50 (blue) day exponential moving averages (EMAs).

Right now we have an “EMA Compression” where price is trapped between the 20 and 50 EMAs.

I highlighted two prior events in 2014 where a similar situation occurred.

The main idea is that we’ll wait to trade the BREAKOUT from this level as a possible opportunity.

Right now, a clean breakdown and close under the 2,035 level suggests a third bearish (downward) outcome.

If so, look to play toward 2,000 at least – if not the 1,965 level.

However, a bullish surge (breakout)cleanly above 2,050 could trigger another short-squeeze which extends the target toward 2,065 then the 2,080 level.

The situation (and planning) is similar on the Dow Jones Industrial Index:

Using similar logic, the upper resistance (20 day EMA) rests near 17,725 while the lower support (bearish breakdown trigger if under) aligns near 17,600.

Incorporate these levels into your current trading strategies and indicators.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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5 Comments

5 Responses to “Support and Resistance Planning to Start January 12”

  1. Jan 12 Falling Market Update and Trending Stock Scan | Afraid to Trade.com Blog Says:

    […] sure to start with this morning’s update on “Support and Resistance Planning for the S&P 500 and Dow Jones” which highlights the higher frame breakout trigger […]

  2. Turnaround Tuesday Market Update and Stock Scan Jan 13 | Afraid to Trade.com Blog Says:

    […] sure to start with this morning’s update on “Support and Resistance Planning for the S&P 500 and Dow Jones” which highlights the higher frame breakout trigger […]

  3. Jan 14 Selling Market Update and Trending Stock Scan | Afraid to Trade.com Blog Says:

    […] be doing, at least in terms of breaking out of the compression (see my prior update on “Support and Resistance Planning for the S&P 500 and Dow Jones“) and trading down toward the 2,000 […]

  4. Pattinson Says:

    Yes, it’s nice to know Support and Resistance level which really help us in getting much better results while I can easily find these levels on my latest platform cTrader, it is provided by OctaFX broker and have such cool features and facilities that even a newbie will start thinking like an expert. It has latest system with updated charts and so much more exciting thing so we can really get ideal results and also we never face issue of execution since it’s done on the spot.

  5. Ayesha Says:

    Trading with Support and Resistance level is arguably the best way, it is not simple but if we understand it correctly then it is going to rain money. I am happy to be here at this blog where there is always great help for me. I usually trade long term and due to swap free account by OctaFX broker, it is easier while for rest this site is the best of the best, so really nothing else is needed for me to do with so much support available.