Overnight the Emini SP500 futures fell into its next level of support following the break of its daily channel earlier in the week as it hit lows of 1320.75, retracing 61.8% of the 1259.75-1419.75 rally at 1320.83. The market has went into short covering off this important support level as buyers have stepped up to defend. This is not only a fib level, but where the market broke out of early February that began the bullish momentum and took the market 100 points up to 1419.75 which was the last level of defense for sellers off the 1441 target. 1320 is a major level to be defended for the year lows to hold. To show strength, buyers should look to close the market above 1335 off these lows to setup a reversal and to offer buyers a low to defend to buy the dip the following day. Resistance comes in at 1345-1363.75 being the range the market failed to hold, this will be the area to work through to get back within the daily channel and attempt to target the next major upside resistance of 1390 off the failed 1411.75 high from the 1st of May. This gives sellers another level to defend as a break through this level gives way to move through the year highs and look to complete the target of 1441. On the downside support is seen at 1325 off these 1320.75 lows. Failure to hold 1320.75 sees next major support at 1315 with major stops below 1296 which matches with the next major fib level of 76.4% at 1297.51. A strong bull will not allow this fib level to be tested, this would leave room to fill the gap that sparked the move higher during the start of the year within 1252.50-1259.75. Filling this gap puts the ball back into the sellers hands as it gives up all the gains of the year for the bulls.
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RISK DISCLOSURE: PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING FUTURES AND OPTIONS IS SUBSTANTIAL AND SUCH INVESTING IS NOT SUITABLE FOR ALL INVESTORS. AN INVESTOR COULD LOSE MORE THAN THE INITIAL INVESTMENT. OPINIONS EXPRESSED. INFORMATION COMPILED FROM SOURCES BELIEVED TO BE RELIABLE, ACCURACY CANNOT BE GUARANTEED.
