Los Angeles -September Trading Plan September 2015 , is the market finding the bottom?

Let’s take a look at the longer term charts.

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.