We all know 1,130 has been a killer resistance level in the S&P 500 ($SPX) the last four months, but the underlying importance of this level may be bigger than you know. Check this out..
Confluence at 1,130
It’s easy to see that 1,130 has been a razor sharp visual resistance level since June. Each of the last two tests of this zone has led to incredible sell-offs in the two weeks that followed. It’s not hard to imagine another round of weakness ahead. The market has formed a very tight 4-day range below 1,130, which means market participants are eagerly awaiting directional resolution.
What makes this level more impressive is the fact that important Market Profile levels are at play, as well. That is, the monthly Value Area High (VAH) and the current developing VAH both reside in tune with 1,130 resistance, which is a fascinating bit of confluence.
To learn more about the Market Profile levels, CLICK HERE.
What does this mean? It means that for two months running the market has settled on 1,130 as the Value Area High, which is a spot that responsive sellers and initiative buyers hang out.
A break above 1,130 would be a call to action to initiative buyers that could spark an impressive rally. But if this level continues to hold, or if we see a fake breakout, look for responsive sellers to push the market back toward the developing VAL at 1,088, with the potential to drop back to the monthly static VAL of 1,059.
The battle line has been drawn at 1,130. Who will step up to the plate? I’ll be watching 1,130 and 1,113 for breakout confirmation.
Let’s see what happens!
Cheers!
Frank Ochoa
PivotBoss.com
Follow Frank on Twitter: http://twitter.com/PivotBoss