Overview

SP 500 FUTURES consolidated below 4176 within a very narrow range. The bulls need to break the 4164 / 4176 resistance zone in order to continue pushing the price higher. To determine the trend, support and resistance, I use the Renko chart technical analysis and patterns for today’s analysis. Not much has changed since last Friday, 5/14/2021.

• The Renko chart uses a traditional 6-point brick size.
• On the upside, 4164 / 4176 is the current resistance zone.
• If SP 500 breaks above 4176 and holds, 4176 becomes the new support level. The next resistance is 4200 / 4230
• On the downside, 4128 / 4110 is the next support zone.
• Psychological barriers: 4100 / 4000

What Happened

It was an uneventful trading day today. SP 500 Futures was confined between 4136 and 4171. The price was pushed higher later in the day and closed near the day high at 4164. If the upward momentum continues, SP 500 Futures will get a chance to retest 4176 and see if it can break above the resistance zone during the overnight sessions.

What’s Next

• On the upside, 4164 / 4176 is the current resistance zone for SP 500 FUTURES. The next resistance level will be 4200 / 4230.
• On the downside, 4128 / 4110 is the first support area.

Below is the daily Renko chart

How to Use Renko Chart Technical Analysis in Trading – Use Support, Resistance, and Trendline

Renko chart provides a simplified version of the price movement without the time element. There is no arbitrary use of time in a Renko chart. The time element in trading can often distort the price movements and therefore, distract the traders.

Traders can quickly and clearly identify the consolidations, trends, swing highs and lows, and breakouts in a Renko chart. The support and resistance levels are much more clearly defined, and there is a little noise on Renko charts.

In today’s Renko chart, SP 500 is once again near the resistance zone – 4164 / 4176. This could be the make or break zone because a lot of actions have taken place in this area. If the bulls can break the 4176 resistance, the SP 500 FUTURES can push higher and retest 4200 / 4230. Furthermore, the long term uptrend is intact. This is the trendline that connects the prior two lows, 3246 and 3756.

The current correction pattern began at the high 4230. The question at the moment is whether this is an A-B-C pattern correction. If it is, it won’t be a downtrend because an A-B-C pattern is not a trend. Therefore, SP 500 Futures will move higher.

On the other hand, if it is a beginning of a major downtrend pattern, i.e. a 5-wave downtrend pattern, the current wave up could be a dead cat bounce. It means we are currently in the 2nd wave; therefore, lower prices are expected.

Whether it is an A-B-C pattern, or a downtrend pattern, SP 500 is currently bouncing back from the recent low, and is moving lower soon once a lower high is established. The lower high could be 4176 or 4200.

As a result, I am looking to initiate a buy-write strategy – purchase SDS ETF, ProShares UltraShort S&P 500, and write covered calls.