How I Pinpoint Support and Resistance When Day Trading

March 4, 2020
/ Jeff Cooper No Ads
/ By Jeff Cooper

GDXJ and the miners had its worst week in at least 7 years last week.

On February 24, it gapped up to 46.40, leaving a signal reversal bar, and finished the week at 35.

I told subscribers to stalk the 50% retrace at 40.85. GDXJ cleared 40.85, spiking to a Bowtie of 50/20 day moving averages at 41.25.

After carving out an hourly micro Cup & Handle on Monday, GDXJ gapped open on Tuesday, running to its overhead 50 day and 50 hour moving averages at 41.25.

It happened so fast that I missed it. However, a retest of Tuesday’s breakout was looming as GDXJ was rejected with authority from the 41.25 key resistance.

We told members on the Hit & Run private Twitter feed to take a long swing position on a pullback to 38.10.

It traded down to 38.06 before turning around.

This morning, GDXJ is trading up to 40.40.

The bottom line is that stocks seek equilibrium… on all time frames off 50% retraces that can be used to your advantage as a trader.

In addition to these mid-points of ranges, I use pivot points, break-out or breakdown pivots to determine the path of least resistance.

Stocks like to test. These offer a good risk to reward entry.

Likewise, when a prior pivot fails to act as support (or resistance), the item is talking.

Additionally, stocks tend to bounce from one moving average to another.

I combine the behavior of the 20 and 50 hourly and daily to find pinpoint entries, which I call Moving Average Pinball.

In an uptrend, a pullback to the 20 day m.a. is what I call a Holy Grail buy setup.

In a downtrend, a snapback to the 20 day m.a. is what I call a Holy Grail sell setup.

I have found over 35 years of trading that the 20 hour moving average is also a good gauge of short-term support and resistance.

Tuesday’s pullback to 38.06 in GDXJ successfully tested its 20 hour moving average before exploding.

Pos GDXJ

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