E-mini Russell 2000 Index (TF) Futures Technical Analysis – December 3, 2013 Forecast

The December E-mini Russell 2000 Index was under pressure overnight. Two days down from the top also helped create a main range at 1093.90 to 1147.60. This makes 1120.70 to 1114.40 the next likely downside target. Since the market is in a corrective mode and in an uptrend, buyers are likely to come in following a test of this level.

Those investors who feel the main range is 1074.60 to 1147.60 may be waiting for a correction into 1111.10 to 1102.50. Comparing the two retracement zones makes 1114.40 to 1111.10 a key zone. This is the combination of the 61.8% and 50% levels.

The nearest uptrending Gann angle support is at 1106.60. At this time, the angle is below the retracement zones and not likely a rational target.

On the upside, investors should watch for downtrending resistance angles at 1131.60, 1139.60 and 1143.60. Short-term oversold conditions could trigger a rally back to any of these angles. The market may even retrace the break from 1147.60 to 1124.80. The idea behind any upside retracement is to create a secondary lower top. Markets don’t usually go straight down from a top. A secondary lower top usually means that short sellers have recognized the developing weakness and are willing to play for a big break.

Since the main trend is up, investors should start to watch for bottoming action inside 1120.70 to 111.40. Holding this zone could trigger the start of a retracement of the first leg down from 1147.60. Traders will then have to watch for the formation of a secondary lower top. If this takes place then chances are, the market will begin to rollover to the downside.

Traders may be willing to create a two-sided market over the next few days ahead of Friday’s jobs report. This means that you have to be prepared to trade both trend and counter-trend until investors are confident enough to pick a direction with conviction.