ESM6 April 6, 2016. Daily chart.
ES successfully held above the 2035 support level after the FOMC minutes report was released, then resumed its rally and filled yesterday’s unfilled gap at 2057.50 to close in a higher trading range.
The price action was bullish after the FOMC minutes. The market sentiment suggests the Fed will not hike rates in April, and there is less chance of an increase in June.
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Today 2062.50-64.50 zone will be a key zone. If overnight trading holds the price below that level the ES could drop back near the 2050-48 zone for testing. But new overnight buyers are likely to enter there.
2045-42 is the first support zone for today. If it fails to hold up, ES could drop to retest yesterday’s low area 2035-38 zone.
Holding above it could lead ES back up to yesterday’s high or higher up to 2071.50-73.50 zone to challenge new highs.
In the short term the ES is very overbought. The current rally is Fed- driven; if the buy volume dries up, ES is likely to reverse.
Now the DOW index is giving a new long-term buying signal by the 50-day moving average line crossing above the 200-day line.
The SP500 index hasn’t done that yet, but the two lines are very close. However the Dow Transportation index didn’t join the current rally. The inter-market non-confirmation could bring high volatility and non-predictable movement to us.
Outlook
Short-term === Bullish
MEDIUM TERM === Bullish
LONG-TERM === Bullish
Support and resistance
Major support levels: 2035.5037.50, 2021-23.50, 2000.50-03.50
Major resistance levels: 2064-62.50, 2075-77, 2085-88, 2098-2100