Key Price Compression Levels to Watch in GS
Wed, Aug 18, 3:51 PM ET, by Corey Rosenbloom
Shares of Goldman Sachs stock (GS) remain trapped between two key price levels as traders await a breakout from this range. Let’s take a focused look at the daily chart of Goldman Sachs (GS) and pay specific attention to the two key levels to watch on the chart. 
Taking a quick look, we see price compressed specifically between resistance at the 200 day SMA (and 50% Fibonacci retracement) at $157.50 and support from the 50 day EMA at $146.90 ($147 for reference). Those are the key levels to watch for a larger range breakout, but there’s an even smaller range that short-term and day traders should be watching. It’s the compression between the 38.2% Fibonacci retracement at $151 and the 20 day EMA at $149.30 (call it $150 for a round-number reference) and the same 50 day EMA price at $147. Thus, the “IF/THEN” statements in GS may be the following: “IF price breaks overhead short-term resistance at the $150 level, THEN expect a play up to the next higher resistance at $157.” or “IF price fails to hold support at the $147 level, THEN expect a further sell-off and break of support to target a retest of the $130 to $135 level.” As a trader, you’re often better by assessing charts in terms of “IF/THEN” statements/expectations as opposed to “Well, there’s support at $147 so Goldman’s going to go up so I’m buying.” What if it doesn’t? If you want to dig a little deeper than the simple levels I’ve referenced here, then look at the classic negative momentum divergence that undercut (disconfirmed) the swing high at the $157 level. The divergence and push into confluence resistance set-up a good short-sale opportunity with a stop above confluence resistance at the $158 or $160 area to play for a retest of daily EMAs at the $150 to $145 area – which is where we are now. Now we’re at another “technical decision node” where price can either bounce upwards off support here – placing a stop under $147 – or slice through the support (shorts would place their stops above $147 in that case). What will happen? The proper question should be “what do I expect and where should I locate my stop/what is my risk?” Or wait for a breakout signal – above $150 or beneath $147 – to put on a trade and join the winning side – bulls or bears – rather than trying to make an educated guess as to whether bulls or bears will prevail. Either way – watch these levels for clues as to the next likely move ahead in Goldman Sachs (GS) shares. Corey Rosenbloom, CMT
Afraid to Trade.com Follow Corey on Twitter: http://twitter.com/afraidtotrade
 blog.afraidtotrade.com
SDI Glossary: "price" Definition
SDI Glossary: "TA" Definition
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