In the previous post, "A Shift in the Bias", we commented that the $SPX was in the process of "shifting the bias" to the downside. Additionally, we anticipated that price would bounce and move back to test the value area (found at the 50-Day Moving Average). After price broke the consolidation area at $1775, buyers quickly liquidated that price area and price "magically" found its way lower, into the long term trend line (drawn from Nov'12 low). Once price met its objective ($1740), traders managed to show some conviction at an obvious support level and now price heads higher toward major points of resistance.
Sitting in the path of higher prices rests the a) 50-Day Moving Average; b) the 61.8% Fibonacci retracement level; and c) the resistance line drawn from old highs from Nov'13 and Dec'13, see Figure 1. The price area of $1810'ish is now a critical point of resistance. What happens at this level should reveal the sentiment of traders and maybe even some longer term investors. IF price fails to trade above this level, THEN buyers will no doubt liquidate positions and look to find a better position (price) at much lower levels.
Sitting in the path of higher prices rests the a) 50-Day Moving Average; b) the 61.8% Fibonacci retracement level; and c) the resistance line drawn from old highs from Nov'13 and Dec'13, see Figure 1. The price area of $1810'ish is now a critical point of resistance. What happens at this level should reveal the sentiment of traders and maybe even some longer term investors. IF price fails to trade above this level, THEN buyers will no doubt liquidate positions and look to find a better position (price) at much lower levels.