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

December E-mini S&P 500 Index futures are trading slightly higher shortly before the cash market opening. The index is coming off its higher for the session. If this creates downside momentum then we could see the market turn lower before the opening, or shortly after the opening.

Today is a light day as far as economic data is concerned and Fed speakers, so the main focus is likely to be on a slew of corporate earnings reports. Traders will also be watching the direction of crude oil futures that are showing signs of a top and could drive down energy stocks. This could drag down the S&P 500 Index.

Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is to the upside. The main trend will turn up on a trade through 2168.25.

The main range is 2182.75 to 2100.25. Its retracement zone at 2141.50 to 2151.50 is currently being tested. Trader reaction to this zone will determine the longer-term direction of the market.

Sellers are trying to form a new secondary lower top inside the retracement zone. Buyers are trying to drive the market through it in an effort to make 2107.75 an important bottom.

If a short-term rally forms between 2107.75 to 2149.75 then its retracement zone at 2128.75 to 2123.75 will become the primary downside target.

Forecast

Based on the current price at 2144.75 and the earlier price action, the direction of the index the rest of the session is likely to be determined by trader reaction to the long-term downtrending angle at 2149.75.

A sustained move over 2149.75 will signal the presence of buyers with the next target the main Fib level at 2151.50. This the trigger point for an acceleration to the upside with the next upside targets 2166.25 and 2168.25.

The inability to overcome 2149.75 will indicate the presence of sellers. This could drive the index into 2141.50 to 2139.75.

The trigger point for a steep breakdown is the angle at 2139.75. If this angle fails then look for a possible acceleration into 2131.25 and 2128.75.

Watch the price action and read the order flow at 2149.75 today. Trader reaction to this angle will tell us if the buying is getting stronger or if the sellers are regaining control.