Critical MA Breach: Bounce or Breakdown?
March 10-14: S/R Levels for 35 Key Securities
It was a wild week full of volatility, however the red move was not a surprise, considering the analysis provided last week for more than 24 charts and the mid-week update which is a must read. Access here.
Last week, when the market closed the analysis for SPX was:
“The weekly chart maintains its bearish stance. I base my investment and trading decisions on chart analysis, disregarding mainstream media narratives and social media opinions.
The weekly candle is not a hammer, price is finding support at the 20MA and a bounce is likely, but the structure suggests that a bounce could be short lived. The invalidation to the bearish thesis relies on staying above $5,945.3 next week”
Access to the publication here, the chart analysis also highlighted that the weekly candle was NOT a hammer:
The weekly peak was $5986, surpassing the identified weekly level by 40 points, though this high was short-lived, lasting only an hour. By 10:30 AM Monday, a bearish trend emerged.
As discussed last weekend, this analysis foresaw the potential for price action to extend beyond its 'typical range' and reach extreme levels due to the bearish impulsive move. Subsequently, the lower of the seven designated levels were once again touched.
How do the S/R levels work?
Let's examine AMD, a stock nearing oversold territory based on its Relative Strength Index. The current volume shelf, indicated by the green arrow, suggests a potential support zone. The latest candle displays indecision, and the daily timeframe, though not shown here, exhibits a bullish divergence between price and RSI. This combination of factors creates the potential for a bounce.
Seven levels have been identified for AMD, including the central weekly level of $99.8. Should price action remain above this key level, the immediate bullish target would be $103.7. Conversely, a breach of $99.8 would invalidate the bullish thesis, with $96.4 becoming the bearish destination.
Given the prevailing high market volatility, price action analysis (candles) across daily, 4-hour, and occasionally 2-hour timeframes is crucial. When these levels are breached by strong candles, whether bullish or bearish, the target is adjusted to the next level. For instance, if the selloff continues and $96.4 is broken, $92.5 becomes the subsequent bearish target. Similarly, for bulls, a breach of $103.7 would target $107.1.
If you trade any of the following securities, this publication is for you: SPX, NDX, DJI, ES=F, NQ=F, SPY, QQQ, IWM, DIA, SMH, TLT, TQQQ, SQQQ, UPRO, SPXS, UDOW, SDOW, URTY, SRTY, NVDA, META, MSFT, AMZN, GOOG, AAPL, TSLA, NFLX, COST, MSTR, PLTR, AMD, GLD, SLV, BITCOIN, ETHEREUM.
The weekly levels have proven their worth during one year already for paid subscribers, get access now.
WEEKLY LEVELS for the 35 securities mentioned:
See the black arrow, it highlights where the price closed relative to the central level for next week, the red percentages indicate the securities that have to raise at very least that percentage to switch momentum to a potential bullish reversal, for example NFLX has to recover $914 or jump 2.7%, AMD, AAPL and MSTR closed already above their central levels for this week (see the analysis below), hence my attention for AMD for the potential bullish example.
GLD, SLV and PLTR are in neutral zone, since they are not as high from the central level as the others mentioned.