Los Angeles -September Trading Plan September 2015 , is the market finding the bottom?
The supporting trend line showing the weekly bullish trend on the S&P500 emini futures has been broken. Price has moved below the 50 Moving Average and broken the previous summer consolidated support zone above the 50MA.
The previous Swing Low of 1790.25 and major support above 1849.25 are the lines in the sand to watch. Greece’s turmoil was quickly absorbed into the markets. China’s fall was not and has had some push back into the US and European markets. Buyers are looking to keep this above 1900 as a psychological support. If we hold above there, we could see a consolidated zone retracing the previous weeks volatile range of 160 points with a move down that was off a gap to an extreme low and then buyers bringing price back up.
How to use the weekly chart in your trading plan.
This weeks price action is contained with in the previous candlesticks high and low. Giving us no real direction for a continuation this next week. We will be watching for price to either break below 1900 or above 2000. We could see these price levels are visited and rejected over the next few weeks. On the weekly chart we don’t see either a bottom for support or a capitulation of price at the lows. Most of the volume last week was buyers bringing the market back up from the large Gap down. So did we find the new bottom? It looks like we have support in where the previous swing low is, we shall see as we wind up this third quarter.
Where could the bottom be for this Trading plan?
Support is coming in at 1900, psychological support, 1834 the previous swing low last week, 1791.75 which is the previous swing low where we broke below the 50MA and then moved back up, and finally 1685.50 where we have support on a test down February 2014 and where we could test the 200 moving average.
The weekly chart is an easy way to catch the direction of the market. It shows you the price action without all the noise and makes the major support and resistance from trend lines and previous price action very easy to follow. Using these previous swing highs and lows, you can then transfer them to a shorter time frame for targets and risk management.
Trading is high risk and care should be taken, if you are not familiar with the market it is best not to trade it at all. Using a trading plan can be part of your risk management. Always trade with a stop, and never risk what you can’t afford to loose.
End of the month trading plan for July 2015 into 1st trading week of August.
Looking for this to retrace to 2100 and then consolidate and move up, or for sellers to take control and move past the support at 2070 and break through to 2050 area close to the 50 moving average. There is some support at this level, around 2070 and we could see a 10 point move up before it reverses and breaks support to return to the 50 moving average.
The consolidation zone from 2050 to 2118 area has been tested on many occasions and the floor has not been determined yet. There has been no real capitulation buying or selling.
We had a higher range for the week with the range moving from last week 35 point range to this past weeks 56 point range. In this type of chop though we must be careful for turn arounds when we get these engulfing patterns because most have only established support and resistance.
Always manage your risk first, and never take a trade you can’t afford.
Trading plan in to August 2015 – Mind the gap
The US markets had a partial correction with a few break away gaps which can become longer term targets for the next move down by sellers. The first gap we can see filled today bringing the market down to within a few points of the previous open gap.
The Opening gap on the S&P500 emini futures was 8 points, we opened with buyers in control, and with in the first hours of trading we closed the Gap. The Gap looks like it acted as resistance where the sellers moved in and then moved the market to the previous lows on the open.
There is still another open gap just below at 2001.50 .
This is another daily chart showing open gaps for the previous months trading action.
Trading plan for open gaps on the daily chart.
The open Gaps below the 200 Moving average are a good target for a major sell off. We bounced on the 200MA and retraced to the previous swing highs. The market might need a pullback to break through this resistance as sellers have moved in on many occasions at these price levels.
The 50MA is the next down side target at 2094.75. You can see that volume has picked up a little bit on the sell off and then volume drops as we put in a bit of price failure under 2108 as buyers moved in.
As we are in earnings this next week we could watch for some volatility. The market really moved with exuberance from the supported lows on the 200MA, it looks like we are watching for some other event to sideline this move up. Be careful trading the highs and always manage your risk first.