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As we discussed in the first session of Chart Reading Mastery on Wednesday, key levels of support and resistance help us frame the structure of the market. When trading, we should always look to trade with the structure. Structure gives us trade direction and also trade location.
As is obvious to all, the Spring from October 4 has had a strong response. In an earlier post (click here to review), we discussed how the market was holding at the then recent highs just below the 1220 level and that the rally to 1250 (a key structural level) put the market into a critial juncture. We noted this along with the earlier supply in this area, but also noted that we gave the edge to buyers because of the way that the market was behaving.
We saw the market pull back to another key level (1215 area) highlighted by the green arrow to test before rallying higher.
We’ve now broken above the 1250 level on good volume. Demand is showing strength here. It is also getting a little overbought and although it may rally a little higher, we can expect a pullback. Where might the pull back end? Well, if buyers remain in control (and I see no evidence of supply to suggest they won’t) then we look to market structure and this would be at about the 1250 to 1245 level. The Chart Reading Mastery course members will know exactly why this area is important.
We just started Chart Reading Mastery and the recording of the first session is now posted in the members’ area. You can still join if you like and review this all-important session on market structure. Plus, there are seven more sessions to come! Learn more here: Chart Reading Mastery
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