Trading S&P 500 Price Progressions


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Alan Farley

18 May, 2018

in Technical Analysis

The lower high gives way to a sell-off (7) that breaks through the support zone. First violations rarely lead to instant trend changes in the futures markets because algorithms that dominate Globex prefer to clean out order volume on both sides before entering broad directional impulses. This bias contributes to a short squeeze above the support zone (8) that attracts aggressive selling pressure and a deeper low (9) in the following session. That low tests the February swing low (red line) and finds support at the 0.786 retracement. The contract bounces to support one last time and prints two failed tests (10,11) before rolling over in a breakdown that accelerates when it undercuts the prior lows, dropping another 20 points in four hours.

The event timeline illustrates how S&P 500 price action aligns with key macro impulses, often on the other side of the planet. This tells the observant trader to pay close attention to economic and political catalysts when institutional capital is likely to execute the most aggressive strategies. It is also highly instructive when bullish news such as ECB  qualitative easing and strong U.S. jobs data fails to push the contract above a broken support level, as it did on March 5 and 6.

In Summary
The S&P 500 index futures contract works exceptionally well as a road map for short-term market timing and direction. Watch the 24-hour, 60-minute chart as it builds support and resistance levels, aligning risk exposure with testing that follows market-moving economic and political events.

Alan Farley can be contacted on this link: Hard Right Edge

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Re: Trading S&P 500 Price Progressions

Standard stuff

May 18, 2018

Member (12816 posts)