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Earlier this week, I pointed out some key levels in the market that we’ve been eyeing closely as we test the strength of this rally.
As of yesterday, we saw the market close above the 0.618 Fibonacci retracement level on the S&P 500 Futures, ticker /ES.
I’ve mentioned before that this level is a key point to watch that many times will give us the signal about whether a rally has legs.
But here’s the thing — while we got one close above it yesterday, today’s action is going to be critical in determining if this rally can hold or if we’re in for a pullback.
The Importance of Today’s Market Action
Yesterday’s big move was driven by some news that shot the market up.
But as we saw before today’s open, the market had started correcting back down overnight.
That’s not a huge concern of mine, as that kind of price action is perfectly normal after a big jump.
The market has headed higher since the open, but as I write this in the mid afternoon, it’s bumping its head on the overnight high around 5583.
The key level I’m watching now is down below around 5527. That’s the 50% retracement level from yesterday’s low to the overnight high.
If we can hold above that 5527 level, then the odds are good that the market could move back up and continue the rally.
But if we drop below that, we might head back down to retest the 0.618 level at 5492.
What Does This Mean for Going Long?
So, what does this mean for those of us thinking about going long the market?
I wouldn’t call it an “all clear” just yet. Today’s close is going to be very telling.
As I said, if we can hold these levels, it could signal that the rally has more room to run.
But if we see the market drop back below that 5527 level, we need to be careful.
That’s the key number I’d tell you to keep your eye on today.
Easy Does It
If you’re looking to go long, keep these key levels in mind and watch how the market reacts throughout the day.
It’s easy to get caught up in the excitement of a rally, which is why it’s important to stay disciplined and not rush into a trade without seeing how these levels hold up.
As always, stay tuned for more updates as we see how this plays out.
— Geof Smith
P.S. Gold historically rallies in August of an election year. And my last trade is living proof!
We just closed an overnight 59.74% winner! And I believe gold’s NOT done rallying yet! See how you can join me in my next trade right here! | | | | |
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