Planning The Next Move In The S&P 500 [SPDR S&P 500 ETF Trust]

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August 11, 2014 3:12pm NYSE:DIA NYSE:SDS

whats nextCorey Rosenbloom: I wanted to highlight a “Repeat Pattern” in the S&P 500 (INDEXSP:.INX) that can help us now in planning the next swing.

Let’s take a look at the pattern and set our targets for planning:

Note the yellow highlights when price trades down under the rising 50 (blue) and 20 (green) day EMA on the thrust back INTO the moving averages.

In February, this “touch of the 20/50 EMA from the underside” occurred near 1,800 and in April the same pattern developed near 1,850.

In both cases, we had a “make or break” situation where price either could trade down against resistance (and target the prior low) or else break above it, trigger a short-squeeze, and continue the trend toward the prior high.

Both times, the outcome was a pro-trend bullish breakout.

Now, we use the same logic into the 1,950 level where price can either fail and trade down toward 1,900 again (short bias under 1,950) or else – and perhaps more likely given the recent past and the uptrend – break above 1,950 and begin a tradable journey up toward 1,990 again.

This is a very simple way to view and plan price movement – a “make or break” level – but it could be more effective than complex planning strategies.

Look to be bullish for a repeat outcome above 1,950 or else cautious for a “pattern break” under 1,940.

This article is brought to you courtesy of Corey Rosenbloom from Afraid to Trade.

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