E-mini S&P 500 Index (ES) Futures Technical Analysis – October 26, 2016 Forecast

December E-mini S&P 500 Index futures are trading sharply lower after a steep sell-off during the pre-market session. The selling pressure is a reaction to a bearish earnings report from Apple late Tuesday.

On Tuesday, sellers came in early to put in a high and sellers came in later in reaction to a sell-off in crude oil. The index formed a potentially bearish closing price reversal top.

The chart pattern was confirmed earlier today when the index took out 2135.25. This triggered the start of a possible 2 to 3 day break.

Technical Analysis

The main trend is down according to the daily swing chart. Momentum is also down with the formation of the closing price reversal top and the subsequent follow-through move overnight.

The main range is 2182.75 to 2100.25. Its retracement zone at 2141.50 to 2151.25 stopped the rally on Tuesday at 2149.75.

The short-term range is 2107.75 to 2149.75. Its retracement zone at 2128.75 to 2123.75 is the best downside target. This zone is currently being tested. An uptrending angle passes through this zone at 2125.75, making it a valid target also.

Forecast

Based on the current price at 2130.50 and the early price action, the direction of the index today is likely to be determined by trader reaction to the uptrending angle at 2125.75. This angle held as support earlier.

A sustained move over 2125.75 will indicate that buyers are coming in on this dip. A trade over 2128.75 and 2132.25 will indicate the buying is getting stronger. The daily chart opens up over 2132.25 with the next target the major 50% level at 2141.50.

A sustained move under 2125.75 will signal the presence of sellers with 2123.75 the first target. The daily chart opens up under this price with the next major target a price cluster at 2116.75 to 2116.25.

Look for a sideways trade if the index stays between 2132.25 and 2125.75. Watch for an upside bias to develop over 2132.25 and a downside bias on a sustained move under 2125.75.