Where we at?

In our last post we saw price hanging around the the 50dma with PnF support just around the corner at 1653.4.  After three trading days since then where are we at?  Well not too far closing at 1652.35.  However, those three trading days are very telling so lets go through them.  First lets review the daily PnF chart so highlight the importance of the 1653 area of support and resistance.  It is important because it was after this level was broken that price continued higher to all time highs. 

So here were are now so lets look at what has been happening by looking at price and volume.  Below is the daily SPX candlestick chart which highlights the area after 1685 support was broken.  We concluded that the previous trading range was distribution and that a high volume price drop would ensue which what happened.  So if we were focus our attention to the last two trading days we saw a break of the next support level at 1653.  What was interesting today was the test of this broken support.  Prices rallied back to the 50dma before reversing (resistance) and closed right at what is now resistance at 1653.  So what we do now is wait to confirm if indeed this is a test and look to see if prices continue to lower.  If it does then we look at the next support level which I will let you fine folks figure out! 

Thanks for reading.