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

March E-mini S&P 500 Index futures are trading lower shortly before the cash market opening. The market looked like it was in the recovery phase shortly after the opening, following yesterday’s steep sell-off. However, sellers came in early, preventing the market from reaching what I believe is its main upside objective, the retracement zone of the break from 2075.00 to 1980.25.

The main trend is down according to the daily swing chart. This was reaffirmed on Monday when the index took out the last two swing bottoms at 1991.00 and 1983.25. However, there wasn’t much of a follow-through move because of a major 50% level at 1978.00.

The main retracement zone and primary downside target is 1978.00 to 1948.50. I think the index will spend a lot of time inside this zone if tested because value-seekers will be buying on a test of this area.

The short-term range is 2075.00 to 1980.25. Its retracement zone is 2027.75 to 2038.75. This is the primary upside target. This zone is important because sellers are going to come in to try to form another potentially bearish secondary lower top. Buyers are going to try to create enough upside momentum to take out this area. Investor reaction to this zone will likely tell us if this market is headed towards new highs or lower over the near-term.

Based on yesterday’s close at 2009.00 and the early price action, the first downside objective is a long-term uptrending angle at 1987.25. A sustained move below this angle will put the index in a bearish position. The next downside targets are yesterday’s low at 1980.25 and the major 50% level at 1978.00.

The 50% level at 1978.00 is a potential trigger point for an acceleration to the downside since the next major support, the Fibonacci level, doesn’t come in until 1948.50.

The first upside target is a resistance cluster formed by the downtrending angle at 2027.00 and the short-term Fibonacci level at 2027.75. This is followed by the short-term Fibonacci level at 2038.75 and the next downtrending angle at 2051.00.

If there is no fresh news today, we could be looking at a two-sided trade with the 50% level at 2027.00 acting as resistance and the 50% level at 1978.00 acting like support. These are the two most important prices on the board today.