Trading plan for April 8, 2016

160407-ES-daily

ESM6 Apr. 7, 2016. Daily chart.

ECB threw cold water on the Yellen buyers yesterday with a sharp price decline. Comments from the ECB suggesting even more negative rates sent many global markets down in overnight trading. ES gapped down at the open and broke the 10 ema line for a further decline to wipe out all the gain made on the prior day.

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The PMO indicator gave a selling signal on the ES daily chart, and on the SP500 cash index, although the DOW is still giving a long-term buying signal. The pullback may be a part of short-term correction. However traders shouldn’t ignore that PMO selling signal.

Overnight trading will give a hint of which direction ES will go because the movement could reflect Yellen’s early evening speech. The 200-day moving average line at 2005 is a reasonable short-term target for the pullback.

If today the ES gets there, a brief bounce should be expected.

2048-51 should be today’s major resistance zone; it is likely for sellers to defend it today.

Outlook

Short-term === Neutral
MEDIUM TERM === Bullish
LONG-TERM === Bullish

Support and resistance

Major support levels: 2021-23.50, 2009-07.50, 2000.50-03.50
Major resistance levels: 2051-55, 2064-62.50, 2075-77, 2085-88, 2098-2100

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