E-mini Russell 2000 Index (TF) Futures Technical Analysis – February 12, 2014 Forecast

March E-mini Russell 2000 Index futures are trading higher at the mid-session, but down from its high. The index is posting a lackluster performance today after yesterday’s surge. The two-day testimony before Congress by Fed Chair Janet Yellen seems to have had no effect on the market. Yesterday, traders did react positively to the news that the U.S. House of Representatives agreed to raise the debt ceiling. Traders liked the news because it avoids problems down the road and it means more government spending which is good for corporate earnings.

Technically, the main trend is down on the daily chart. The main range is 1181.30 to 1078.00. This makes the retracement zone at 1129.70 to 1141.90 a possible selling zone. Certainly counter-trend buyers will look at this zone as a potential area to begin taking profits. Aggressive short-sellers may decide to refresh their positions inside this zone. Either way, it is an important area to watch.

One of the best signs today of a top will be an intraday closing price reversal on either the hourly chart or at the end of the day on the daily chart. This chart pattern will mean the selling is greater than the buying and it could start a two day break equal to at least 50% of the current rally.

A breakout over the Fibonacci level at 1141.90 could trigger a move into the downtrending angle at 1153.30.

A breakdown under the 50% level at 1129.70 will be the first sign of weakness and could trigger a break into an uptrending angle from the 1078.00 bottom at 1118.00. Taking out this angle with conviction will be a sign of weakness. The daily chart indicates there is plenty of room to the downside if this angle fails. It also indicates that 1106.80 is a potential downside target.