E-mini Russell 2000 Index (TF) Futures Technical Analysis – February 10, 2014 Forecast

The March E-mini Russell 2000 Index futures contract is expected to open flat to lower this morning. There are no key economic reports today, but traders may begin squaring positions ahead of Fed Chair Janet Yellen’s testimony before Congress on Tuesday.

The daily chart indicates there is plenty of room to the upside, but the emphasis may not be on price levels today but rather value and momentum. Based on the last break from 1181.30 to 1078.00, the index appears to be set up for a retracement to 1129.70 to 1141.80. Since the main trend is down, selling pressure is likely to re-emerge following a test of this zone. 

The above describes the price action, but momentum may be the main factor today since the index posted a solid two-day rally last week, putting it in a short-term overbought position. If the upside momentum diminishes then look for the start of a retracement from 1078.00 to 1113.90. This makes the 50% level at 1096.00 the next likely downside target.

The first support level today is an uptrending angle from the 1078.00 bottom at 1102.00. Breaking this angle should trigger a further decline into 1090.00.

Today could feature two-sided trading action. Since 1129.70 is still a potential upside target as well as 1096.00 to the downside. It looks as if the tone of the day will be determined by how investors handle the test of the steep uptrending angle at 1102.00.