E-mini S&P 500 Index (ES) Futures Technical Analysis – July 30, 2014 Forecast

Position-squaring ahead of today’s U.S. Gross Domestic Product report and the U.S. Federal Reserve monetary policy statement helped drive September E-mini S&P 500 Index futures sharply lower on Tuesday. Contributing to the weakness were worries about repercussions from the implementation of new sanctions on Russia and the escalating of fighting in Gaza.

The GDP report is expected to show the economy grew by 3.1% during the second quarter. This follows a 2.9% decline during the first quarter that was blamed on bad weather. Look for the Fed to provide a new outlook for the economy while maintaining a historically low interest rate environment and its schedule to reduce monthly monetary stimulus. It may also issue some clarification on its outlook for the labor market. The GDP comes out at 8:30 a.m. ET. The Fed announcement will be made at 2:00 p.m. ET.

The main trend is up on the daily chart. The main range is 1942.50 to 1985.75. The retracement zone created by this range is 1964.00 to 1959.00. This zone is currently being tested. Trader reaction to this area is likely to set the tone for the day. In other words, look for this area to act like a pivot.

The short-term range is 1985.75 to 1960.75. If the low this week holds at 1960.75 then look for a rally into the pivot at 1973.25. Overcoming this level will put the index in a strong position. The first downtrending angle comes in at 1969.75. This is followed by angles at 1977.75 and 1981.75.

Today’s session starts with the market trading on the weakside of an uptrending angle at 1974.50. Overcoming this angle will also be a sign of strength. On the downside, the nearest support is a pair of uptrending angles at 1958.50 and 1955.75.

Watch the price action and order flow at 1964.00 to 1959.00 early in the session. Holding this area could drive the market into a pivot at 1973.25. A failure to hold 1959.00, or taking it out with conviction could trigger a break into a major retracement zone at 1951.50 to 1943.50. Look for volatility today and a jump in volume.