Looking at daily candles for hints into the week ahead. Two short term levels are important here. One is around 1634.8 near the market open on Friday, its same as breakout level "A" market on chart. The other level is near 1646.87 which was the doji reversal level and the break down marked "B" on chart. You can see that prices failed at "A" and must break above it to continue higher. The index closed lower on Friday, confirming a higher low up trend. We are consolidating here in a triangle looking to break out. Two scenarios seem possible -
First is that the rebound continues higher and prices break level "B" tomorrow, I have a preference for this outcome. On the day trading side breakout of "A" would make a good entry for a long position, to close near "B". Break above should give us the second entry as sellers might try to test the bulls resolve near "B". Breakout should also take us further to retest the recent high in the days to come. Failure would create a wedge reversal.
Second scenario is bearish in which case the red close on Friday continues with a break down below, would require a 30pt move or so, now thats possible as volatility is back. But would require some bearish news unless we are reading the price action incorrectly and the bears are charged up. Two news items to watch is the developing story from Syria which could throw us a surprise and off course Economic data, although the latter isn't all that interesting tomorrow.
