Indecisive Price Action Makes Levels Essential
S / R levels for the week of May 12th to 16th.
We’re navigating market environments that are far from straightforward. The recent wave of tariffs have injected considerable uncertainty into global trade and economic policy. These external factors can contribute to conditions that define competitive advantages or vulnerabilities within sectors or for specific stocks. During these times, technical analysis isn’t just helpful—it’s indispensable.
When you see a candlestick forming near a major support line amid ongoing macroeconomic headwinds, it’s more than just a price reaction; it’s a signal that market participants may be defending what they perceive as fair value, despite external pressures. In practice, if you’re trading a security that historically respects a certain price floor, a strong bullish candlestick formation near that zone—like a hammer with a long lower wick—might be your cue to consider a long position, assuming other factors align.
Combining Candlesticks with Technical Levels for an Edge
How exactly do you combine these elements for an edge? Here’s a step-by-step approach I’ve refined over time:
Identify Key Levels: First, the levels provided in this publication provide precise support and resistance zones for the week ahead, considering also the monthly levels.
Monitor Candlestick Formations: With your levels clearly marked, keep an eye on candlestick behavior as price approaches these zones. For example, if you witness a bearish engulfing pattern near resistance, it signals that bulls might be losing control and a reversal could be forming. Conversely, if a bullish pattern appears at support, it might indicate that value buyers are stepping in; a sign the price could stabilize or even reverse upward.
Volume as Confirmation: Always pair these signals with volume analysis. An increase in volume during a reversal setup lends credibility to the move. In unstable markets, where sentiment can shift rapidly due to external policy or tariff announcements, volume confirms whether these technical signals are supported by genuine market conviction.
Risk Management: I cannot stress enough the importance of risk control. Use stop-losses strategically placed beyond the support or resistance levels. This helps manage potential losses should the market test your zone further or fail to reverse as anticipated.
By combining these analytical steps, you’re not trading one-dimensionally on technical recognition; you’re synthesizing price action with broader market dynamics. This layered approach is what sets savvy traders apart in environments that are anything but predictable.
The S&P500 during the week:
The 2 Hours chart presents the bullish hammer above the central level on April 30th, and during this last week, the central level acted as support, with a temporary breach on April 7th that makes the case of fake breakdowns and the reason why a stop loss has to be set below the level.
Anyway, the bearish doji observed on Thursday initiated a decline, however, there is no bearish confirmation since the blue line ($5,606) has not been lost. That blue line will change next week, the level is provided below.
For next week, the support and resistance levels will be crucial, since the price action has been indecisive for seven consecutive days already. Such indecision builds price platforms that can act as a launchpad, as presented last Wednesday in the market update and the chart for SPY and NDX.
For the short term, there are as many bearish references as bullish ones, for that reason the “bullish above, bearish below” approach is crucial.
Why “very short term”? I provided my medium term view in the previous market update, for access click here. And remember that I provided an executive update of fundamentals and then the statistics were shared in the second half of the publication.
Last Saturday’s edition was named “Bear Market Over? This Level Decides” click here. And this week that level was not reached, but the central level was not breached either.
The central level will be key next week, unlock that level for 35 securities including SPX, NDX, SPY, QQQ, IWM, DIA, TSLA, GLD, NVDA, PLTR, MSFT, META, NFLX, MSTR, AAPL, GOOG, AAPL, AMD, SLV, TQQQ, UDOW, COST, ES=F, NQ=F, and many more by upgrading your subscription. You don’t need to trade all of the securities posted, you just need to trade one or a couple of the securities mentioned to use this golden information.
WEEKLY LEVELS:
The securities highlighted in red will start the week with a bearish mood, considering: