Upside Levels to Watch on the Daily SP500 July 8
Today’s rally took us up to the expected overhead resistance target at the 1,070 index level, but what prices to we watch for resistance levels if buyers push the index above 1,070?
Let’s look at the daily chart for those price levels to target.
Today’s chart is taken from the “Forecasting Tomorrow” section of today’s Idealized Trades Report for members.
We expected a likely bounce higher off the confluence support at the 1,010 level, and that’s exactly what we got in the last two days.
However, if buyers push the index above the 20 day EMA – as appears likely – we need to look to two other confluence resistance levels as potential upside targets.
The first confluence resistance target appears at the 1,090 level, which reflects the 38.2% Fibonacci Retracement and the falling 50 day EMA which will intersect that price in the next few days. That will be the primary target to play for.
However, if this really is a deeper retracement swing than expected, then we’ll need to look to target the more important confluence resistance at 1,110, which stems from a prior price swing high, the 200 day SMA (very important), and the 50% Fibonacci retracement.
In sum, watch price if the rally continues to 1,090, and then if above that, watch for a swing to test the 1,110 level.
Anything above 1,130 would change the short-term structure, though anything less stymies the market in its current downtrend.
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade
What is meant by “…anything less stymies the market in its current downtrend.”? We go into a sideways trading range?
Correy, I see a broadening bottom chart pattern. What do you think?
http://michaelarold.wordpress.com/2010/07/08/br…
In terms of objective trend analysis, down trends are not changed without a series of higher highs and higher lows. We are in an official daily downtrend due to the sequence of lower lows/lower highs and negative EMA structure. Barring a move above 1,130 which would be a higher high, anything less causes the market to remain definitionally/objectively in a downtrend, even if we move sideways.