Good morning! Trading was slow on Tuesday despite Monday's wider range. The greater risk for a continuation of the previous range that I mentioned yesterday returned with another narrow session. The day began with a small gap down into the open with the S&P 500 and Dow Jones Industrial Average stuck between 15 minute 20 simple moving average support and 5 minute 20 sma resistance. The range broke on the downside, but the choppiness that emerged out of the open remained.

Even though the market plugged lower, there was a lot of overlap and the upside moves within the downtrend were rather sharp. After consolidating into the 5 minute 20 sma resistance heading into the 11:00 ET reversal period, the market again made another low intraday. It barely broke in the S&P 500 and Dow though and this created a trap pattern that allowed some buying to emerge over noon. The support zone on the larger time frames came from the middle of congestion levels on Monday.

Although the mid-day support held extremely well, so too did the 15 minute 20 sma resistance. The market still failed to really development any stronger momentum bias one way of the other though and even though the indices sold off again at that point, the volatility remained and the market held the lows from earlier in the session. The channel from that smaller downtrend broke higher into the final hour of trading, returning the market to previous 5 minute highs, and then selling off for a final time into the closing bell.







As this range progresses, the market is showing favoritism to the lower end of it with slower overall pace on the upside moves than the downside. The 10-day simple moving average is going to be the initial daily support coming out of the range. This can still be forming a larger cup with handle pattern though on the daily charts with the cup beginning on February 27 and into March 21.

Toni Hansen is President and Co-founder of the Bastiat Group, Inc., and runs the popular Trading From Main Street. She can be reached at Toni@tradingfrommainstreet.com.