Price Targets In Uncharted Territory

Andy Nyquist over at See It Market has put together a series of guest posts that he is calling Market Masters. I'm honored to have the opportunity to be the second one to post following the always brilliant Ryan Detrick. Last week Ryan got the series going with a great post on Sentiment. Make sure to check that out if you haven't already.

When trying to figure out a topic, I figured that since S&Ps are currently sitting at historic highs, now would be as good time as any to discuss how we look for price targets in this sort of environment.

Here's a brief excerpt:

"Today we’ll focus on two strategies that we can employ in such scenarios. The first one is the underrated measured move. Price pattern recognition is one of the older methods used by technical analysts. Robert Edwards and John Magee were writing about these patterns back in the 1940s. Typically, we’ll take the height of the pattern, or consolidation, and then add that to the breakout level, giving us a price projection. In this case, let’s use the S&P500 as an example, as we’re already well above any previous resistance levels throughout history.

As we can see in this daily bar chart, 1538 was support for the S&P500 during March and April. About 60 points higher S&Ps ran into resistance during the month of April. This 60 point range gives us an eventual price target of just under 1660 based on that one pattern. This helps us recognize that there is potential resistance at these prices even though the index has never traded up there."

Click here to read the price target post in full

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Thanks again Andy for including me in your Market Masters series. Looking forward to reading the rest of the posts.