The market continued its way upward relentlessly. My last week’s bear forecast proved to be wrong and the market has broken cycle resistance on the 11th of September. Now we are on unchartered waters and we cannot look back for previous support and resistance levels. What we can do though is to look at last week’s levels that acted multiple times as support/resistance and those levels where high volume bars were detected. The identified levels usually repeat as support/resistance when revisited.
To detect new levels of support/resistance (S/R) we will look at 2 conditions:
- Levels that acted in the day session as S/R where high volume bars have appeared
- Levels where price has spent the less time as possible acting as S/R
For levels of type 1, we have detected this week the level 2491.5, which saw lots of action and volume both defending the level either as a support or as a resistance and high volume was as well seen when violently crossing this level. This action was observed during the day trading session during the week.
For levels of type 2, we can observed during the week the levels 2481.5, 2488 and 2495.
One could argue that level 2497/8, the close of Friday, could be added, but this level has been visited only once and at the very end of Friday the 15th of September, which was the 3rd Friday of the month, an Options Expiration (OpEx) Friday. It is recommended not to day-trade on an OpEx Friday as they tend to be erratic as much action is related to the opening and closing of Options positions than to normal trading (if such thing exists).