As mentioned in last weeks article, the S&P500 emini futures have previously pulled back to find support in the last week of may and the first weeks of June. Today, we hit the support of 2068.75 in the overnight session and have bounced past the Point of Control at 2081 where the buyers are moved back in to control.
In a recent talk with day traders in Newport Beach. “Trade what you see, remember this is a widely held market and every time there has been a pullback or minor correction, the crazies will come out saying the sky is falling. The sky will fall when we have a 10% or more correction. Until then play the direction of the market. Trading is about being nimble.” Joel Wissing
This pattern where we have a double top or head and shoulders pattern gives us a small pullback or minor correction (less than 5%) has proven to be a continuation pattern in this widely held market.
The S&P500 reversal off of support at 2067.25 where sellers capitulated and buyers moved in is a key area of support. If you notice the buyers moved in and brought price above the 50MA at 2097 showing strength in this move up. This means the short term bullish trend is still in tact.
We have entered the next price projection zone (pinkish box) and are looking for it to move up, consolidate, and then break through the top either in the last quarter of the year of before the first week in August when we normally get a minor correction.
Downside projection this week was for the 2067.50 area, and the market is not showing signs of reversing off of today’s bullish move. If there is an outlier (read this from December 2014) that causes sellers to leave their widely held positions the next area to be tested will be 1960 for a full correction where we have an open gap.
Warning: Summer time trading can have very low volume and quick volatile movements. Always manage your risk first and don’t trade unless you know what you are doing. Only you can be responsible for your income, wealth and freedom!
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“Traders use a trading plan to set their trades, risk management and execution with the nimbleness of trading the direction of the market.” Joel Wissing Money Maker Edge™ Trading Course.
Weekly to Daily to shape your perspective of the market. Sequencing is one of the most important steps for a trader to learn. How one sets up their trade plan is how you create your opportunities in the market.
The weekly chart is very consolidated at the top of the market where it has been hovering trying to make it’s way to new highs. 2074 the previous swing high on a move up is the new support on this move, as noted by the red line.
The sellers had a slight uptick in volume coming close to the average monthly volume of 5259k. An increase over the previous month. Still watching as the volume spikes are decreasing.
The Range is very small at 29.75 points for May. This type of small range occurs normally before we have some volatility and a break out in a market. Last years summer also started with this type of small range and then broke out in August. We might see the same unless an outlier pops on to the scene. Greece exit, could be a big mover of the markets, or a second tier bank failure for non payments of debt. Remember in a widely held market supported by quantitative easing we will see these periods of consolidation, low range days, weeks and months and then a small correction which acts like a spring to bring in the volatility to break through new highs. Here is the article about some of the pressure on the 2015 markets.
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Trading plan for the S&P500 emini futures. Price has moved into the next Price projection block from 2090 to 2203. The sellers moved in on Tuesday testing the support and almost closing the gap which is laying at 2091, very close to the 50MA, which could be added support.
The seller volume spiked and moved up to 1.54 million contracts traded showing some volatility with the buyers coming back in at support keeping the market above 2100. The market was closed in the US on Monday and Tuesday when the market opened we had sellers committing to this small move down. Wednesday price action on the open had a small test down and then the buyers moved in to bring the market up 17 points. If the market closes above 2123 today we could have a powerful buy pattern as the buyers would have engulfed yesterdays price action.
The price projection to 2140, then to 2165 is still open. We will see where buyers stand going into Friday’s session to see if there is room for new highs.
Remember this is a widely held supported market. The US is not in quantitative easing but other countries are and with institutional buy backs at an all time high it seems this bull market still has direction. A 20 to 40 point pull back is not the signal to the end. A correction, which is normally assumed to be 10% correction in price would put us at support above 1800 which looks like the line in the sand for control in this market. This market is very risky and only use risk capital to trade it. Do not trade unless you know what you are doing. When corrections in the market occur, they occur quickly and Market Makers, take the profit out of the market, and normally that means any retail traders.
Having a written trading plan is helpful to be able to analyze your work. If you don’t understand how you analyze and look at the market, you will not experience improvements in your risk management and your ability capitalize on market price action. You don’t have to take every trade, there will always be another trade.
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The S&P500 emini futures weekly trading chart is showing a very congested trading zone at the top of the market. The 5.4 million contracts traded is slightly above the weekly average but can be considered low volume. The previous weeks trading range is 54.3 points which is slightly above the average for the past 5 weeks. Last week the market ended in a Doji where sellers could not change the direction of the market and buyers did not make any real gains until Friday’s close.
Seems that traders are waiting for some decision around the Grexit or some other outlier to come to fruition.
The Daily Chart on the other hand is spotted with open gaps, low volume moves and signs of continuation to the next consolidation zone.
The daily volume on the S&P500 emini futures contract is under the moving average. The moving average on volume is also headed lower and lower. A rising market on low buyer volume is showing weakness. Although the official US Quantitative easing program ended last October, we can expect corporate buy backs and foreign banks to be buying in until the top comes in and there will be another correction.
There are 5 open gaps since the last correction. We look for 5-7 open gaps for each correction. Remember this is just a tendency. Don’t gamble on it. The next resistance at 2136-40 is our next target on the week and then moving into the next consolidation period if there is no correction.
This week could be a slow grind up if the news doesn’t send us rallying. Any news has been good news as observed last Friday, watch for Oil to consolidate too and for some weakness in Oil, Gold and Silver as the dollar reacts to the conditions in Europe.
Pressure is mounting on the Euro and we are seeing some hair trigger moves in trading, so watch your self. This next break out could take a lot of money out of the markets.
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Price action on the weekly chart can be seen in many areas, first by looking at the candle stick and seeing the range from the high to the low which this past week was 44.25 points, just under the 49.10 average range for the past 5 weeks.
The previous three weeks sellers moved in and brought price down to support at 2035, then this week the buyers have moved in bringing price to a high around 2108. We broke through the resistance at 2073 and 2084 on the daily chart and clears the way for a test to previous swing highs of 2018.
Looking at average range of 49, for the past 5 weeks with a decrease in volatility, this would tend to show that the high we could reach this week from a low of 2060 is short of the high at 2109 projection. Volume is increasing which could effect the range as when weekly volume increases there is a tendency to see larger price ranges. We are going to need more volume commitment from the buyers to see this break to new highs. If we see buyers moving in on increased volume we would look to buy the dips for our weekly trading plan after we see reversal patterns from last weeks sellers control.
The daily chart on the S&P500 emini futures contract is showing buyers moving in to control after Monday’s loss of control to the sellers. The bottom was confirmed in this move with the touch of the trend line at 2081 which is the 50MA. If the day ends in a doji or a buyers hammer (where price closes higher than the open), then we will look for a continuation of this short term bullish trend in to the week.
You might note that the equidistant green box is coming to it’s end and we are about to enter the next phase of the move until the next green price projection box. We don’t know if price will close another gap at 2012 and confirm off of the 200MA, or if buyers will stay in control taking it to new highs. The equidistant move would be a projected high of 2140 which is the mid point in the price projection box for the next consolidation period.
Remember to do your own analysis, and if you are following the crowd you might be falling into a market maker trap. Manage your risk first and make a written weekly trading plan. This will allow you to reflect on your own analysis.
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The “W Pattern” is still playing out mentioned in the last trading plan post. We are seeing the 5 step pattern with a 50% retracement to support before the next move in this continuation pattern.
The last two days of this daily chart showed a spinning top like pattern where the buyers brought price higher then sellers rejected it to close with almost a doji like pattern, Sellers moved in today May 5, 2015 and hit support at 2090 with buyers stepping in at 11:30 AM
We are still above the 200MA and in a bull market Trend. The 50MA is also holding support and we shall see during the week if this level around 2083 is tested again. 2060 is the next major support for the price action to chop back and forth. If the market breaks below this support, we could see a further move to the 200MA at 2010 where we still have an open Gap. These light blue boxes are open gaps.
Sellers in control – watch for a move to support at 2083 then a move to next levels of support 2060 and if there is major sell pressure on light volume, then test to 2010.
Buyers in control – bounce off of support and get price to new highs. Probably Friday as a recovery from the unemployment news on Thursday.
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This has given the sellers two pushes from the double top and buyers following up for a third attempt on the resistance at the top of the consolidated zone. The 50 MA is acting as a Point of control between the buyers and sellers.
If you notice the move from point 3 to point 4, you can see the move to point 5 is about a 50% retrace of the buyers move. Then support follows.
The projected equidistant price move is 2140 if buyers stay in control.
Always manage your risk first. Although this pattern is a continuation pattern to new highs, the market has many outliers that could reverse this especially as we are headed into earnings.
If Sellers move in, we could see price close the open Gap at 2016 and then a move to the 200MA where if we stay above it the bull market is still held in tact.
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Trading is pretty simple, the market goes up or down, it is controlled by buyers or sellers. A gold trading plan looking at different time frames, support and resistance levels and trading range can make your trading more responsive to what is happening in the market.
Gold Trading, we are seeing a bounce off of the 50MA which will act as a ceiling. this was at $1215. Once gold broke through the $1200 mark, we saw market makers selling into the bid. This gave us price failure over $1200 and the price of gold then turned and moved down to $1177 support range. The retracement down might not be finished and the Point of Control (Decision Point) on this move is $1175 with a range to $1190. This is a 15 point range, where we can see quick moves intra-day.
The Range the Price has been consolidating in is from $1140 to $1220, until we see any real commitment by buyers or sellers in volume there will be little chance for a change of direction in this bearish channel. The 200MA moving average is close to $1240 and can be used as an upside resistance which would give us a right hand shoulder for another classical trading pattern the Head and Shoulders with the head being the swing high at $1300. If the sellers should move in the Equidistant move is projected to $1044-$1050 if sellers take it through the previous swing lows of $1140. A powerful swing down. If we do test the 200MA then I would look for a sell off to $1080.
The zone from $1290 to $1350 will be the fight zone between buyers and sellers, if we see gold prices move into this area, I am looking for it to stay consolidated until there is an outlier to break it out of the range.
Gold prices in the future reflected in dollar value, will be more relative to value of the dollar in international trade, and when trade moves away from the dollar, we shall see price increase. I expect to see it come into play in September 2015 when China, Russia and Saudi Arabia trade directly and move out of dollar oil trades. The velocity of this change will have the greatest net effect on the dollar gold values. Joel Wissing from Outliers 2015
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Compare the high starting the first move down to the high at point 2. It is a higher high, then we go to the next high point 4 and see that it is even higher. The S&P500 emini futures is playing into a technical trading pattern known as the megaphone.
The characteristics of a megaphone is that the highs are getting higher and the lows are getting lower on 2 consecutive legs of a trading chart.
Compare the high starting the first move down to the high at point 2. It is a higher high, then we go to the next high point 4 and see that it is even higher. The Lows at point 1 and point 3 are relatively the same. Drawing a trend line from the beginning to point 2 and 4, and then a supporting trend line from Point 1 and 3 you can see that the form diverging, this is called the megaphone pattern. The most optimal one would have the lows at point 3 lower but being the same also is a key to the pattern.
Point 4 is the temporary new high with a 61% pullback or retracement to point 5. This sets up the Green Zone where we can see the pattern from point 1-3 repeat or a break to new highs after a pull back to 50% of the distance of the move from point 4 to 5. Note the green supporting line at 2070. If this acts as support, then we might see a break of the top in the near term with a target to 2140.
If price breaks the support of the green zone, then watch for a move to 2000, the pschological support and where the 200MA is headed, and then further retrace to 1960. There is an open gap at 1940 that has not been filled. Remember to do your own work, study the charts and if you don’t know what you are doing, don’t trade. Trading is high risk, and you need an executable trading plan.
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Take a look at the S&P 500 and what do you see? Up? Down? Sideways?
Do we see this as as an opportunity to buy? Or a set up to reverse? On the daily chart we see price has retraced to the previous daily swing high at the 2080 area of resistance. If we see price hold under the 2080-85 area we could see it turn to test down lower to the 2055 area of support around the 50 Day MA. If we see price move up through the resistance and above the 2085 area, we will likely see price retest the previous highs once again and even possibly move to test new levels of resistance.
For the next few days the 2080-85 area will likely be the key in looking for the next move.
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