Stalking Two Price Support Zones

 | Apr 19, 2013 | 9:30 AM EDT
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Before I go over my analysis in Monsanto (MON), I did post a chart of the S&P 500 (SPX) in the Columnist Conversation section Thursday that shows us the bigger picture. If we finally do start to see a deeper downside correction, it could be as much as a 130-150 point correction from the recent highs without creating any damage to the bigger picture bullish trend.

We are finally seeing some signs that such a correction may continue to unfold. One of the signs is the May 13 EMA crossover to the downside on the daily chart. If we do see such a correction, then these prior corrective declines would suggest support coming in below the market with a wide zone between 1440-1470. If the market does eventually approach these lower levels, I will be able to refine and fine tune some levels and timing work at that time. If the rally just resumes instead, then I won't have to worry about refining anything!

Source: Dynamic Trader

Next let's take a look at MON. One of the three trade setups that I look for every day in the market is called a Fibonacci price cluster. This is the coincidence of at least three Fibonacci price relationships that come together within a relatively tight range. These clusters identify key support or resistance decisions that I like to coordinate with a trade entry trigger.

We are currently testing a rather healthy price cluster decision in MON on the buy side. I am considering the pattern in MON bullish as long as price continues to hold above the $98.92 swing low made on March 25. There are two price support zones I'm stalking that come in above this prior swing low. The first one comes in at the $100.73-$101.63 area, which includes the coincidence of at least seven Fibonacci price relationships. The second zone comes in at $99.90-$100.00, which includes a 100% price projection (important by itself) that overlaps a 0.786 retracement of a prior swing.

Source: Dynamic Trader

I will be watching for purchase triggers in MON in the coming sessions on a 15- or 30-minute chart as long as it holds above one of these key price support decisions. If the uptrend resumes, the upside potential is around the $108 area. If I don't see any entry signals I will stand aside.

For more information on trades and triggers please click here.

Columnist Conversations

we like this chart here, it appears ready to move higher. BOUGHT BZUN OCT 35 CALL AT 3.40
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