S&P500: Avoid The Middle And Wait For These Levels.

S&P500 update: This market is consolidating as evidenced by the converging trend lines on this chart. Price is gyrating inside the middle of the range which means this is the lowest probability area to put on a swing trade long or short.

The 2652 level is the .382 of the recent bullish structure, it also represents the middle of the range at the moment. There is no advantage to trading the middle since price action is most random here. There was a pin bar, tweezer bottom candle combination off of the 2615 support level which served as a long trigger, but because of the location, this is a low probability scenario for a swing trade long. On the other hand, for day trading or scalping purposes, this trigger offered plenty of opportunity since profits are generally taken quickly when employing such short term strategies.

The next most attractive level for a swing trade long is the mid to low 2590s. Not only is this within the 2615 to 2587 support zone (.618 of recent bullish structure), it is also within a minor reversal zone boundary. That is where we want to see bullish reversal patterns that offer well defined risk levels.

Keep in mind, if price continues higher from current levels, and breaks the 2690s, a retest of the 2710 to 2751 (.618 of recent bearish structure) would be more likely and that is the area to consider for swing trade or day trade shorts. You do not have to trade the S&P futures outright in order to capitalize on this information. At S,C, we use the S&P to help time stock and options trades, since it serves as a gauge for the broader markets. Make sure to check out our stock and option performance page if you are a more advanced investor.