Back to Short Term Support. Break or Bounce?
“…Now that we have reached short term resistance, we should expect a brief retracement, possibly 38% of the small range back to 25,800.” Once again, the market did as expected and pulled back to within 100 points of this level. Whenever Support is approached from above, the question is always, “Break or Bounce?” Either can provide great opportunity.
The Daily Chart continues to show the wide range, with Long Term Support resting on 25,000. We have the sub-range marked (25,750 to 26,300), which is operative right now. Looking at the Daily Chart, I can make the case for a break of Support and a continuation to the bottom of the range at 25,000. That would be a nice move.
As I said yesterday, the market is behaving in a rather predictable way. The 25,750 level is an important short-term “line in the sand”. All we have to do is watch the Open to see if this Support Level holds to know likely direction for the day. If it is solidly broken, the Dow will very likely shed another 750 points down to 25,000. If it bounces I would expect a move back to 26,300. That’s 1,300 points of movement potential. Get ready.