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.