Stalking Two Price Support Zones

 | Apr 19, 2013 | 9:30 AM EDT  | Comments
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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.

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