We can see a major price reversal occurred in the S&P 500 on Friday after the index tested 2114 resistance following the Brexit vote. Price collapsed through the 2070-2080 and 2030-2040 support areas, an extremely bearish signal. This might be the start of a leg lower for at least a short period.
Volatility will continue, but trading the downside seems the logical play this week. Look to use any dead-cat bounce (upward movement) to get short (sell), and wait for a price action sell signal on one-hour, four-hour or daily periods, ideally around the 2040-2060 area.
We previously discussed looking to buy gold between $1,242 and $1,256 an ounce on any pullbacks, in line with the long-term uptrend in this market. We can see that last week price provided a nice opportunity for us to buy in that support range as it pulled right back into it before exploding higher on Friday in the wake of the vote.
We remain bullish on this market and will be watching support levels closely for buying opportunities on any pullbacks in the coming days.
Crude oil stayed contained under overhead resistance (bound by $50.50 a barrel and $51.63 a barrel). We are biased to the short side, but any reconnection back up through these highs invalidates that bearish view. If the bears win this war, one could expect the market to try to trade lower into obvious support at $46 and then $42.50-$42.80 area. Look for sell signals on the one-hour, four-hour or daily charts to consider selling opportunities on any short-term pockets of strength this week.
Copyright 2016 Learn To Trade The Market
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