E-mini Russell 2000 Index (TF) Futures Technical Analysis – May 31, 2016 Forecast

June E-mini Russell 2000 Index futures spiked higher into the close on Friday after Fed Chair Janet Yellen commented on the timing of the next Fed rate hike. The move likely created enough upside momentum to support a further rally when the market reopens on Tuesday after Monday’s U.S. bank holiday.

The main trend is up according to the daily swing chart. The market is not in a position to change the main trend to down, but it is in the “window of time” to form a potentially bearish closing price reversal top.

If this chart pattern forms then we could be looking at the start of a 2 to 3 day correction. This wouldn’t come as a surprise since we often see a position-squaring break ahead of the U.S. Non-Farm Payrolls report. This data will be released on Friday.

The main range is 1154.40 to 1082.70. Friday’s close was well above its 50% level at 1118.50. This supports the strong upside bias.

Based on Friday’s close at 1150.10 and the upside momentum at the finish, traders are likely to take a short at the main top at 1154.40. Taking out this level will likely trigger a further rally into the December 29 main top at 1158.60.

The nearest support is a downtrending angle at 1143.40. Crossing to the weak side of this angle will indicate the presence of sellers. This could trigger a break into the major uptrending angle at 1138.70. This angle is very important because it has guided the market higher since the 1082.70 main bottom on May 19.

Taking out 1082.70 will indicate a major shift in investor sentiment. This could drive the market into the next downtrending angle at 1132.40. This is the trigger point for another steep sell-off with the next major target the major 50% level at 1118.50.

Look for an early upside bias today because of Friday’s strong momentum into the close. Be careful buying strength because of the possibility of a potentially bearish closing price reversal top.