Putting short-term and long-term charts in perspective

 

 

Did you ever encounter different views on a different time-frames? Showing you a different picture. What to choose for trading? What strategy? That is where your sense of trend direction kicks in. What do we have looking at the S&P500 charts now?

Looking at the monthly chart above we can see that the instrument is in the clear well-defined uptrend. This uptrend has its extension by breaking above the 2900 level of the horizontal resistance. As long as it is above this resistance and 2750 level of the recent medium-term uptrend line upside extension is warranted.

For some traders which are not using the top-down trading analysis, the problem is arising when they look at the weekly chart and they are intrigued by the latest rejection of the 2950 horizontal level resistance. Some see this as a top in this instrument. The pair is still above the 33 and 55 WMA on a Weekly timeframe. This fact could be used for a swing trading with a good risk to reward.  Target should be in the 3000-3250 zone and the risk to reward for this kind of longs is excellent.

 

 

A Daily chart is revealing the 2869 level uptrend line support and traders should be looking for the long trades here. From the monthly chart, you can recall the importance of the 2750 level and this is where your stops should be somewhere below the 2750 level. This will be then a long trade with the 120 points of the risk comparing to 200-300 points reward which is excellent for trading.

 

The main conclusion of this technical analysis insight is that in the medium-term S&P500 will have a higher probability to swing higher and the invalidation of this swing higher will come only on a daily close below the 2750 level.

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