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Why the 1,150 Level is Important SP500 Resistance

I’ve been saying that the 1,150 level is the next likely target once 1,121 was broken, and the market is struggling to overcome the 1,150 level currently.

Let’s take a look at an additional reason why 1,150 is an important barrier for the S&P 500.

In my prior post “S&P 500 Hits 1,150 Resistance… but Will it Hold?” I described how the 50 month EMA is serving as overhead resistance on the higher timeframe.

The chart above shows an updated Andrews Pitchfork Tool originating from the November lows, January highs, and finally the March 2009 lows which I’ve been updating you in prior posts.

The Pitchfork Trendline Channel still continues – amazingly – to contain price almost ‘perfectly’ in its rally seemingly without end – the Pitchfork tool has been helpful in guiding analysis.

Price has been ‘riding’ the upper mid-point trendline (61.8%) with the exception of a few ‘pop-outs’ in September and October 2009.

The 50% mid-line has contained price as support since the July 2009 lows – again, to me this is very eerie.

Beyond the Andrews Trendlines, I’ve drawn a Fibonacci Price Projection tool starting with the March 2009 low, rising to the June high and then ending at the July low.  The software (TradeStation) drew the 100% “projection” or equal “Measured Move” (also known as an “AB=CD” price projection pattern).

Surprisingly, this 100% projection price comes in exactly at 1,150 – where we are now.

Some people call this methodology the “voodoo technicals” but it is just one of many ways of assessing price action and setting potential targets and resistance levels and noting what happens at these levels (whether we reverse fully, pause slightly, or bust strongly through).

As such, this is one of the main reasons why traders are watching the 1,150 level so closely – and a break above would be significant, but until that happens, we could see (and are seeing so far) a retracement move down at this likely target level.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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

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9 Comments

  1. Most of the people use LOG scale for longer time-frame but I see that you follow LINEAR scale. How do you decide between LOG and LINEAR?

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