E-mini S&P 500 Index (ES) Futures Technical Analysis – February 12, 2016 Forecast

March E-mini S&P 500 Index futures are expected to open higher based on the pre-market session. A recovery in European bank stocks and position-squaring ahead of the three-day U.S. Presidents Day holiday may be helping to underpin the market.

Look for increased volatility and volume with the release of U.S. retail sales and import prices at 8:30 a.m. ET, with consumer sentiment and business inventories set to come out at 10:00 a.m.

Technically, the main trend is down according to the daily swing chart. Yesterday, the downtrend was reaffirmed when the index traded below the previous bottom at 1804.25. The break stopped at 1802.50. The lack of follow-through to the downside suggests that buyers may have come in after sell stops were hit.

Furthermore, the actual low for the day at 1802.50 occurred during the pre-market session. The low for the U.S. session was 1805.00. This suggests that U.S. traders were buyers throughout the session.

The nearest support angle today comes in at 1818.50. This is followed by the main bottom at 1802.50.

The first major upside target is a steep downtrending angle at 1868.00. This is followed by the short-term 50% level at 1871.25.

The direction of the market today is likely to be determined by trader reaction to yesterday’s high at 1847.25. Taking out this level could trigger an acceleration to the upside if U.S. traders are willing to buy strength. If they back off from buying strength then the best support area to watch for countertrend buying is 1822.50 to 1818.50.

Today’s price action will be more about position-squaring ahead of the holiday. I don’t expect the major players to take aggressive positions ahead of the holiday and ahead of the return of Chinese traders on Monday. The Chinese are either going to play bargain-hunter after this week’s steep sell-off, or play catch-up by driving the market lower. Expect more volatility next week.