Monday, July 19, 2010

7-19-2010 Key Intermediate term Levels

Good Evening Traders,

This evening I wanted to present a longer term chart for everyone's consideration. When the chart makes a daily high or low and it corresponds to a previous high or low I draw a BLUE horizontal resistance line. If the market touches the line and reverses two times or more over a long period of time I highlight the line GOLD and make it thicker and easier to see. The gold lines are the most important support lines in my trading.

For example look at the gold line at 1057.00. It was the high of the gap down open 6/29/2010. Then it was the bottom of a gap up opening on 7/8/2010. It acted as support again that day and the market rallied. Now 6 trading days later the price falls exactly to the 1057.00 line and reverses. Now you can tell that's a significant level! If you prefer looking at a volume profile chart, you'll notice 1057.00 is clearly an area of acceptance in price. different methods same result. Point is to know these levels in advance so you can anticipate when prices may reverse. The market is a lot more likely to reverse at one of the lines rather than at a random point where buyers and sellers haven't traded very often in the past.

Talking about today's market... It was pretty much a neutral day. You could have expected that after all the fireworks on Friday. I hear a lot of hedge fund managers had their weekends ruined (via zero hedge) ! Regardless of the slow market, price did reverse and begin to make some headway in the afternoon. In the overnight session ES traded down to 1058.50 and reversed. I will be looking for that area as support tomorrow as well.

Buyers will be in control if they can get the market back up into the gap over 1076.00. But if sellers can push it down below 1057.00 its not going to have much support until 1040 area! Basically "Watch out below!" I try to keep the blog mostly about trading, but considering the headlines and crappy econ numbers out recently I am bearish going into this week. Maybe some good earnings will save us... who really knows just trade the charts. The rest is pretty much noise


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