Updating and Planning the Current SP500 Range Play
As price continues to trade within a clearly defined range pattern, let’s update our S&P 500 chart and highlight what we should be watching and expecting right now.
Here’s a pure price chart of the S&P 500 (daily) with two Range Boxes highlighted:
Price patterns of the past echo into the future, and we’re seeing a similar pattern to that of January.
The current range pattern – highlighted – is slightly longer than the January pattern and the upper/lower boundaries are defined at the 2,040/2,050 (green) and 2,100/2,110 (red) levels.
We can visualize these as “expensive” or bearish into the red zone and “cheap” or bullish into the green.
The remainder – the yellow – is the value or range zone through which price plays Ping-Pong.
Ranges DO NOT last forever and price will eventually break free (outside) of the range.
In February after a mini-bear trap (an initial break under 2,000), buyers flooded capital into the market to trigger a breakout mid-February above the 2,065 boundary.
The result was a multi-day short-squeeze bullish rally to new all-time highs.
We stand on the precipice of yet another potential bullish breakout where it would be similarly unwise to short-sell above 2,120 should another bullish breakout occur in April (or perhaps May).
Otherwise, 2,100 and 2,110 will be the upper resistance from which we could see another sell-swing to 2,045.
Here’s a broader perspective of additional indicators and how January’s pattern developed and resolved:
Continue monitoring these range-reference levels and plan your swing and intraday trades accordingly.
Follow along with members of the Daily Commentary and Idealized Trades summaries 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).
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