Monday, January 12, 2009

Previous Support is the new resistance

I have included a 5 minute S&P futures chart from today's market action.  The red cross is the opening of trading today.  (You don't need to look at the data to the left of the red line). 

I identified on the morning sheet (posted on the website every morning before open) that 874.25 was a good support level.  Sure enough, the S&P sold down to this number at 920am CST.  This level held for one hour before being broken. and the market went lower.  Now take a look at the blue line, i have drawn on the chart below.  This is the 874.25 low.  This support now becomes resistance at 1250pm.  This was the dead high for the rest of the day.  During slow, rangebound markets; technical analysis can be useful if applied correctly.