E-mini S&P 500 Index (ES) Futures Technical Analysis – December 5, 2016 Forecast

Volatile price action by the Euro in reaction to the results of the Italian Referendum has helped form a potentially bullish outside move by the December E-mini S&P 500 Index futures contract early Monday. The index initially traded lower, taking out Friday’s low before reversing to the upside and moving higher for the session.

Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been to the downside since the formation of a daily closing price reversal top at 2213.75 on November 30. The index also formed a weekly closing price reversal top last week that was confirmed earlier in the session when 2184.25 was taken out.

A trade through 2213.75 will negate the reversal tops and signal a resumption of the uptrend. If this occurs then 2179.00 will become a new main bottom. A trade through the intraday low at 2179.00 will indicate the selling is greater than the buying at current price levels.

The intermediate range is 2147.75 to 2213.75. Its retracement zone at 2180.75 to 2173.00 stopped the break earlier when the index tested 2179.00. Taking out this zone will likely send the index to 2147.75.

The new short-term range is 2213.75 to 2179.00. Its 50% level or pivot is 2196.50. This level is controlling the direction of the index today.

The main range is 2028.50 to 2213.75. If there is a huge break then its retracement zone at 2121.00 to 2099.25 will become the primary downside target.

Forecast

Based on the current price at 2201.25 and the earlier price action, the direction of the index today will be determined by trader reaction to the pivot at 2196.50.

A sustained move over 2196.50 will indicate the presence of buyers. The next two upside targets are downtrending angles at 2201.75 and 2207.75. The latter is the last potential resistance angle before the 2213.75 main top.

A sustained move under 2196.50 will signal the presence of sellers. This could trigger a move into the downtrending angle at 2189.75. Breaking this angle could drive the index into 2180.75 and 2179.00.

Taking out 2179.00 could create enough downside momentum to challenge the short-term Fib at 2173.00. This is followed by a major uptrending angle at 2164.50.

The angle at 2164.50 is very important to the long-term structure of the index. If it fails to hold then look for the start of a steep sell-off.

Watch the price action and read the order flow at 2196.50 the rest of the session. Trader reaction to this price level will tell us if the buying is getting stronger or if the sellers are retaking control.