E-mini S&P 500 Index (ES) Futures Technical Analysis – July 25, 2016 Forecast

September E-mini S&P 500 Index futures are trading slightly lower after posting a new contract high earlier in the session. The selling pressure may be position-squaring and profit-taking ahead of the U.S. Federal Reserve’s monetary policy statement on Wednesday and the Bank of Japan’s statement on Friday.

The main trend is up according to the daily swing chart, however, momentum has been also sideways since July 14. The gain from high-to-high since that date is only 4.50 points. This may be an indication that buyers are a little tentative about buying strength at current price levels.

The short-term range is 2142.75 to 2172.50. Its 50% level or pivot is 2157.50. Based on last week’s price action, this pivot which has been moving slightly higher, is controlling the short-term direction of the market.

The intermediate range is 2065.75 to 2172.50. Its retracement zone at 2119.00 to 2106.50 is the primary downside target.

Based on Friday’s close at 2167.50 and the earlier price action, the direction of the market today is likely to be determined by trader reaction to the steep uptrending angle at 2169.75.

A sustained move over 2169.75 will indicate the presence of buyers. This could generate enough upside momentum to re-test the intraday high at 2172.50. There is no resistance over this price so we could see an acceleration to the upside. However, traders should continue to watch for a closing price reversal top.

A sustained move under 2169.75 will signal the presence of sellers. The daily chart is open to the downside with the next target the short-term pivot at 2157.50. Taking out this level with conviction could drive the index into the July 14 low at 2142.75. This is followed by a long-term uptrending angle at 2133.50.

Look for an upside bias on a sustained move over 2169.75 and a downside bias on a sustained move under this angle. Also watch for a possible closing price reversal top. This could lead to a 2 to 3 day break. We’ve already had the higher-high, now all we need is the lower close.