This morning I sent out a ‘Tweet’ pointing out that the last swing high on the daily chart for the June eMini S&P was 1176.50. This turned out to be useful information; let’s take a look at today’s action.
In last night’s Swing Trader’s Insight newsletter I commented that today was a Buy day for the S&Ps according to the Taylor Trading Technique (for a primer on the TTT go here). This followed yesterday’s Sell Short day, which pushed the 2 period ROC down to a buy signal level,
On a TTT Buy day we look for the market to open near the low of the session and rally over the course of the session, closing higher. In an idealized TTT Buy day, the Buy day signal coincides with a test of the previous session low; the rejection of trade under that low, then subsequent reversal rally is the Buy day entry trigger. S&Ps didn’t have the low test today; you had to find another technique for a long entry today.
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The long entry wasn’t the reason for this post; I wanted to point out how I viewed action around the 1176.50 high. Thinking about price action in acceptance or rejection terms helps understand how to treat support and resistance.
The 1176.50 high was a natural rally objective. The acceptance / rejection concept came in with how the market behaved when it traded over the old high. Acceptance (held trade) over 1176.50 would be evidence of higher prices to come; trading back under the old high would indicate rejection, that the old resistance area still was resistance.
The first time over 1176.50 was the first chance to test the theory, by shorting on the move back under 1176.50. That’s where it got interesting. It quickly found a bottom, then rallied to make a one tick new high for the day, likely stopping out some shorts from the first sale. This high held, and the subsequent move back under 1176.50 was a better sell. I’m watching the old overnight high at 1172.00 as a downside target.
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This is a sample of the analysis from my Swing Trader’s Insight advisory service. For information on STI, and to sign up for a free two week trial, visit 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.
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