S / R Levels - Sep 9 - 13
These golden levels serve as a predictive tool and, as demonstrated this week, can also act as a protective measure - SPX, NVDA, TSLA, GDX, IWM, QQQ and other securities breached warning thresholds
$5620, the level that was anticipated as the difference between bull and bear zones was broken since Monday, even $5589 as the level that provided more oxygen to price action in case of fake breakdowns.
During the previous weeks, the central level looked like a distant line in the sand for SPX, the market was bouncing with conviction and there were no references for reversals, however, as anticipated last week, my experience with long weekends had another occurrence of a bearish reversal on Monday’s futures session, followed by an immediate decline since Tuesday on market hours.
Four weeks ago the Support and Resistance levels worked as predictive tool when the selloff started (also in the futures session), and considering the monthly level reached, a bounce was easy to anticipate.
This week $5620 was the central level that I shared as a reference to differentiate bullish or bearish bias, and it was breached since Tuesday morning. For people who used it as a reference for stop orders, that was the best insurance to secure profits, even $5589 as mentioned above.
All the other central levels presented for NDX, IWM, ES_F, NQ_F, SPY, the Mag 7, GDX, Silver and Oil were breached.
When that happens some people short the security using in the inverse mode the levels, that means: The previous support that is now resistance can also be a security level if shorting, and using it as a stop loss for shorts is equally valid.
Should you set stop orders exactly at those levels?
Remember the series of publications about risk management published two months ago, this is the link for the edition about setting stop losses:
For a bullish reversal to occur next week, the price must surpass new levels. Here are the updated weekly levels to watch. Don't be misled by a minor 0.2% green move in the S&P 500 on Monday. A genuine bullish reversal requires the following metrics to be met for each of the securities analyzed: