Stocks have staged a strong rally today after a big selloff in the second half of last week. The daily chart gave us a “heads up” for a potential big move today; there were also clues as to today’s direction.
The daily chart for the December eMini S&Ps is below, with Friday’s bar circled. Friday’s range contraction told us to look for a directional move today-Friday’s range was 58% of last Thursday’s. The range contraction on a down day after the two previous down bars was an n indication that the bearish momentum was waning and a correction might be in the works.
Breakout bar is circled
In the bigger picture, prices had declined to some significant support. The 1034 area was a double top in August; as it was resistance it is now support. In addition, 1031.13 is a 50% retracement of September’s rally. I added Fibonacci retracement levels to last week’s selloff to get some ideas for price objectives for a rally.
The 5 minute chart for today shows how the day unfolded, and how you could have traded it. I drew lines at Friday’s high (a possible entry point); I also drew the Fibonacci retracement levels to show possible rally objectives. The ToF levels are from my Trade or fade advisory.
5 minute eMini S&P chart
For more information on trading breakouts in futures, check out my Breakout Futures Trading Method book here.
The information contained here includes information from sources believed to be reliable and accurate, but no guarantee is made as to accuracy, nor do they purport to be complete. Opinions are subject to change without notice. Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Copyright © 2009
This feed is for personal, non-commercial use only.
The use of this feed on other websites breaches copyright. If this content is not in your news reader, it makes the page you are viewing an infringement of the copyright. (Digital Fingerprint:
f2ea78dd95959aa32f651cec20a16e23)
