It was an impressive performance by the bulls last week and the markets have consolidated well after the recent gains. We have already looked at whether the markets the overbought here or not, and its now time to look at the charts to determine the important support and resistance levels for the coming week. Let's start with the 15 minute chart of the S&P.
The first thing we notice is a three day ascending triangle being formed. For those of you who are not familiar, here is a definition of ascending triangles. "The ascending triangle is a bullish formation that usually forms during an uptrend as a continuation pattern. There are instances when ascending triangles form as reversal patterns at the end of a downtrend, but they are typically continuation patterns. Regardless of where they form, ascending triangles are bullish patterns that indicate accumulation." (via stockcharts.com)
As mentioned above, ascending triangles usually break towards the upside. However, there is also negative MACD divergence forming which would indicate a break towards the downside. Either way the ascending triangle breaks, keep a close eye on this ascending triangle formation on Monday. If the triangle does break towards the downside, 1101 (gap up from Thursday) should provide the first support followed by 1097 (high of the big move on the 8th and been successfully tested since). As far as the resistance goes, the top level of the ascending triangle i.e. 1111 should obviously be the first resistance followed by the longer term resistance of 1115.
To sum it up, here are the important levels for the early part of next week:
Resistances: 1111, 1115
Support: 1101, 1097
I have tried giving a detailed explanation for why the above levels are important so as the newbie traders can figure them out for themselves. I hope it was a little help to some of you readers out there!
I will be back with the Chart of the Day and a watchlist for next week.
Take care and good luck!
The first thing we notice is a three day ascending triangle being formed. For those of you who are not familiar, here is a definition of ascending triangles. "The ascending triangle is a bullish formation that usually forms during an uptrend as a continuation pattern. There are instances when ascending triangles form as reversal patterns at the end of a downtrend, but they are typically continuation patterns. Regardless of where they form, ascending triangles are bullish patterns that indicate accumulation." (via stockcharts.com)
As mentioned above, ascending triangles usually break towards the upside. However, there is also negative MACD divergence forming which would indicate a break towards the downside. Either way the ascending triangle breaks, keep a close eye on this ascending triangle formation on Monday. If the triangle does break towards the downside, 1101 (gap up from Thursday) should provide the first support followed by 1097 (high of the big move on the 8th and been successfully tested since). As far as the resistance goes, the top level of the ascending triangle i.e. 1111 should obviously be the first resistance followed by the longer term resistance of 1115.
To sum it up, here are the important levels for the early part of next week:
Resistances: 1111, 1115
Support: 1101, 1097
I have tried giving a detailed explanation for why the above levels are important so as the newbie traders can figure them out for themselves. I hope it was a little help to some of you readers out there!
I will be back with the Chart of the Day and a watchlist for next week.
Take care and good luck!
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