Support Range Bouncing For The S&P 500 Index [SPDR S&P 500 ETF Trust, ProShares Ultra S&P500 (ETF)]

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September 24, 2014 2:32pm NYSE:SDS NYSE:SPXU

technical chart lookCorey Rosenbloom: Despite the lengthy uptrend, the shorter-term S&P 500 (INDEXSP:.INX) has devolved into a sideways trading range with clear boundaries.

Let’s take a look at these boundaries, chart the current rally, and plan the near-term future for the market.

We’re using the @ES futures chart to highlight the recent trading range and the visual divergences that have taken place into the support and resistance range boundaries as drawn.

In simplest terms, the key focal point for the @ES futures include the 2,000 range high and the recent – today’s inflection – low into 1,970.

Price pushed beyond the 2,000 boundary to form a Bull Trap and we see the expected reversal/reaction back down to the lower support level (1,970).

At this point, we’re playing a bounce up off the 1,970 support target and are looking initially for the 1,985 midpoint, and even higher than that (targeting 2,000) should this bounce continue to fill-out the range as drawn.

We can see another perspective on the S&P 500 and why the current support low is so important:

A quick glance at the daily S&P 500 chart shows a key inflection (reversal) up off the prior price low and the rising 50 day EMA (1,978).

Price currently trades into the 20 day EMA at the 1,993 level and we’ll watch it for additional clues.

A clean breakthrough above the 1,995 level should lead to a continuation of the trading range back to 2,000 then the 2,010 ‘range’ high.

Whatever other analysis techniques you’re using, be sure to put price in the context of the current sideways trading range and critical inflection support – “make or break” – into 1,980.

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

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