Levels to Watch

The market pushed higher yesterday in response to Friday’s minor spring, breaking above the supply line highlighted in earlier posts.

We have not seen significant supply come into the market since September 1st.  Until we do, the odds favor that the market will continue to rise.

Trading ranges can be tricky for some traders.  It often reminds me of what is said by experienced generals about military battle plans: You make a detailed plan, but it often gets thrown out when the action starts!  That’s OK and nothing to get stressed about.  Just keep your head on the overall structure of the time frames you are trading.  Even though the daily is range-bound, the 5-minute can trend in either direction.

Key levels to watch:

• 1200 as the top of the recent trading range.  Yesterday, the market reached this area with a high of 1196.  We have seen the market fall back from this level on two prior occasions.  Will supply step in again at this level?
• 1225 as the high of the UT.  If the market reaches this level, it is likely to try to go at least a little higher.
• 1250 as the resistance level formed by the last swing low before the break of the last major trading range.  A strong drive above this area would bring us back into the upper trading range.  Because of the early August downdraft, supply remains dominate in the background and I thus view this as a low probability at this point in time.

I’ll be taking a break from blogging for a while as Helen and I go on holiday.  We’ll be back soon.   When we come back we will have some exciting news for you regarding trading.  So check back in early October.