Trade Setup for July 31st

Here are the zones I am watching for July 31st

Resistance

1285.75-1286.75
1290.50-1291.50
1300.50-1301.50
1308.50-1309.75

Support

1280-1279
1274.25-1273.25
1264.25-1263.25
1257.50-1256.50

My Outlook

Nothing has really changed since yesterday in my outlook. Oil bounced yesterday which could shake up the market a bit though it didn't do so yesterday. Apart from that though there is nothing to update on.

My Focus

Currently we are trading at the 1282 area in the overnight market. The pivotal area on the upside for tomorrow is the 1291 area. It is the previous high in the market. I do suspect we can break it from the looks of this run up so far but not sure if it will happen tomorrow. If we show significant weakness up there I will look for some form of pullback.

On the bottom end we have 1274 which is the pivotal support area. If we reach down there I would be looking for some strong buying to come in to help prop the market over the 1291 area. I think it will be important to see which one is met first, 1291 or 1274. If we hit 1291 and retrace first, its not a good sign for the buyers. However if we reach 1274 and bounce, it could be a nice set up for a new high.

I have become concerned about trending days recently. They seem to catch me out because I am limiting myself to only s/r trades. Now I prefer trading at s/r levels however on trending days it is rare to see the market use the s/r levels in the direction of the trend for pullbacks.

I do have other ways of trading but recently have been limiting myself to purely s/r levels. I define strongly trending days by the action of the Tick. Like we saw on Tuesday the market wasn't interested in any extended selling. At least for the entire morning.

Now my way of trading these trending days has been using the Fast and Slow EMA's on my 5 minute chart. They commonly are a form of moving support or resistance in trend days. You can see the way it rides the fast EMA on the Tuesday.

So when a trend day is identified via the Tick action being rather one sided, and the EMA being already respected once and following roughly a 45 degree angle, I will use that as a moving s/r in the direction of the trend. This can help me stay on the right side of the market instead of looking for the opposite move simply because I want to trade.

I am still taking my casual approach as seen in the journal with my decrease in number of entries. Trades will be at the s/r levels, either fixed or moving s/r depending on the type of day. Stops will be hidden behind strong market areas and initial profit targets will be placed in easy to reach spots. The second position will be trailed should the first target be taken.