Trade of the Day – March E-mini S&P 500 Index – February 10, 2016

Today is a difficult day to find a reasonable day trade because many investors have taken to the sidelines because of Fed Chair Janet Yellen’s scheduled testimony before Congress. We may see similar price action on Thursday when she starts day too of the proceedings. Because of the choppy, two-sided trade taking place while she speaks, the trading conditions are more suited for scalpers rather than day-traders.

There is activity taking place in the March E-mini S&P 500 Index futures contract that is worth noting. After reaching a low on Monday at 1821.75, the market has consolidated the past two days. The price action suggests that a potentially bullish secondary higher bottom may be forming. If this occurs then buyers may generate enough upside action to challenge a key pivot at 1881.00. Overtaking this level could create enough upside momentum to eventually challenge the main top at 1940.00. A trade through this level will turn the main trend to up.

Earlier in the session, the index reached a low at 1838.50. This was slightly above an uptrending angle at 1834.25. This move was able to generate enough upside momentum to overtake the next uptrending angle at 1864.25.

A sustained move over 1864.25 the rest of the session is likely to generate a test of a key price cluster formed by a 50% level at 1881.00 and a downtrending angle at 1884.00. This area is important. Overtaking 1884.00 with conviction could trigger an acceleration to the upside with the next major target coming in at 1912.00.

Watch the price action and read the order flow if 1881.00 to 1884.00 is tested late today. Watch for a technical bounce on the first test of this area because the main trend is down and buyers are likely to come in to defend the trend. However, be prepared for a breakout over 1884.00 because the daily chart indicates there is plenty of room to the upside.

Since the market didn’t sell-off hard on Yellen’s comments, it may draw the attention of buyers late today or early Thursday.