E-mini Russell 2000 Index (TF) Futures Technical Analysis – January 4, 2016 Forecast

March E-mini Russell 2000 Index futures are trading sharply lower in the pre-market session. The move is in reaction to a steep sell-off in the global equity markets, triggered by a 7% plunge in Chinese equities.

From a longer-term perspective, the acceleration to the downside began when the index took out the uptrending angle at 1132.50. This angle is now new resistance. If the downside momentum continues then look for an eventual test of the uptrending angle at 1099.00. This is the last potential support angle before the 1065.50 main bottom.

The short-term picture is also starting to look bearish. Today’s earlier sell-off turned the main trend to down on the daily swing chart. This price action made 1160.00 a new main top.

Based on the current price at 1114.80, it looks as if sellers are having trouble with a price cluster at 1114.60 to 1112.00. Inside this zone is also the previous main bottom at 1112.90. This area is currently controlling the short-term direction of the market and may even act like a pivot when the regular session opens.

A sustained move under 1112.00 will indicate that the selling pressure is getting stronger. The next downside objective is an uptrending angle at 1108.10. This is the last potential support angle before the 1101.60 main bottom. Taking out this bottom should trigger an acceleration into the major uptrending angle at 1099.00. The chart opens up to the downside under this angle.

Overcoming and holding above the uptrending angle at 1114.60 will signal the presence of buyers. These will liking be value-seekers trying to take advantage of the cheap prices.

The daily chart indicates there is plenty of room to the upside if buyers can sustain a rally over 1114.60. The next potential upside targets are a cluster of angles at 1127.60, 1132.50 and 1136.00.

Watch the price action and order flow at 1112.00 and 1114.60 today. Look for a bullish tone to develop on a sustained move over 1114.60 and the bearish tone to continue on a sustained move under 1112.00.