Equity markets have been recovering at a relatively slow pace since the corrective move earlier this month. However, as of today, prices have hit the highs from before the pullback, with an upward trend. While the current price is up on the day, it’s not extended, and it is near a key resistance area, indicating a possible breakout.
Despite this being a strong resistance level, there is a chance that prices could stall here and pullback, as seen prior. However, the market has been generally strong since mid-March, and the pullback earlier this month was relatively shallow, rallying at a strong support level. While it’s impossible to predict what the market will do, based on the current situation, looking for long positions seems to be the most comfortable option this morning.
MSFT – Long – This is the first interesting thing I’m seeing today. Looking at the daily chart’s patterns, price has been pushing up since the beginning of March, reached a peak about 4 trading days ago, and has pulled back from there. It reached some support, that was prior resistance and today, has pushed up from that level. Right now, the candle that’s showing has a long lower shadow and almost no body
On the 1h chart, price gapped up a bit and had a strong push, then pulled back during the next candle. The pullback is to a strong support level (again, on the 1h chart) and if it can break the day’s highs, there’s some gap to fill. Since I’m bullish overall right now, this pullback looks like the perfect opportunity to get in to. I’m going to set an entry on the break of the day’s highs if the R:R is there.
The market failed to hold on to any of the early gains, and failed to make another push up to/through the day’s highs. It actually, has started to drop and is down ~1/4% now (at 10:00am). So, I’m shifting my outlook because I didn’t really see any longs I liked anyway (shortly after setting my entry order in MSFT price continued to drop, taking out my would-be stop by a lot, so I cancelled the order).
While I was going through my screener earlier, I came across SCHW (Charles Schwab), but ignored it because it had been so weak for so long. Looking for Shorts, now, I came back to it. On the daily chart, this is showing a near-perfect retest of a resistance area that was prior support, and was pushing down from there. There’s a lot of room, with not a lot of chop, to the next support area, so I like this to the downside. The only wrinkle is: Since I was initially bullish, but am taking a bearish trade, I’m only taking 1/2 a position size. We’ll see how this plays out.
Update: 11:13 — Equities began to rally, and pushed up to +.24% on the day — it appeared the strength came back. I had cancelled my MSFT order because it pushed down through my stop level, but coming back now, it only wicked below that — that candle closed above. With the market rallying (and while I had another trade out there, it was largely inversely correlated with the S&P), I decided to put the order back out there. Unfortunately, though, I forgot to adjust the entry from a “Limit” to a “Stop” so it triggered immediately. Hopefully I was right and I still end up winning this trade.. If I do, I’ll have to call it luck and I don’t think I should take much from it…
While I was going through my screener earlier, I came across SCHW (Charles Schwab), but ignored it because it had been so weak for so long. Looking for Shorts, now, I came back to it. On the daily chart, this is showing a near-perfect retest of a resistance area that was prior support, and was pushing down from there. There’s a lot of room, with not a lot of chop, to the next support area, so I like this to the downside. The only wrinkle is: Since I was initially bullish, but am taking a bearish trade, I’m only taking 1/2 a position size. We’ll see how this plays out.