E-mini S&P 500 Index (ES) Futures Technical Analysis – January 6, 2016 Forecast

March E-mini S&P 500 Index futures are trading lower shortly before the cash market opening. The index opened on a downtrending angle and broke sharply. The move accelerated to the downside when a long-term uptrending angle was taken out.

Based on the current price at 1981.25, the direction of the market the rest of the session will be determined by trader reaction to the long-term 50% level at 1978.00. This price represents the upper level of a major value zone. The bottom of the zone is the 61.8% level at 1948.50.

Trading could get very volatile inside the 1981.25 to 1948.50 retracement zone because sellers are going to try to drive the market from the top to the bottom of the zone. Buyers, on the other hand, are going to come in because this zone represents value.

The zone represents the 50% to 61.8% retracement area of the rally from the September 29 main bottom at 1853.25 to the November 3 main bottom at 2102.75.

Treat the 50% level at 1978.00 as a major pivot today. An upside bias will develop on a sustained move over this level. The first target is a long-term uptrending angle at 1989.25. Overtaking this angle could create enough upside momentum to challenge the downtrending angle that stopped the market earlier in the session. This angle comes in at 2011.00.

Bullish traders should note that 2011.00 is also a potential trigger point for an acceleration to the upside with the next target coming in at 2043.00.

A sustained move under 1978.00 will indicate the selling is getting stronger. The daily chart indicates the market has a straight shot at reaching 1948.50 if buyers fail to materialize. This level is followed by a long-term uptrending angle at 1921.25.

Watch the price action and read the order flow at 1978.00 all day.