Corey Rosenbloom: As traders, we often look to simple support levels to form the core of short-term trading strategies.
For example, we may look to play bullishly for a bounce off a key level, or else trigger a short-sale position on a breakdown under the same level. It’s a way to view price without bias, awaiting a reaction into a critical level.
We have another short-term support level challenge – and opportunity – happening right now into S&P 500 index level 1,700 which we can see clearly on the hourly (intraday) chart below:
The 1,770 index level is a “Polarity” level, which means that 1,7700 has served both as resistance (early November) and support (mid-December).
It doesn’t mean that price is required to bounce again up off this level, but it does provide a clear “make or break” pivot to use for planning buy or sell strategies with the other indicators or trade entry methods that you use.
With the exception of a quick “Bear Trap” – an initial or quick break under 1,770 that results in an instant upward move back above 1,770 (reference December 18th’s “Fed Day” example) – we would generally look to trade bearishly under 1,770 or aggressively bullish on any upward impulse from 1,770.