Trading plan for Dec. 15, 2016

ESH7 to Dec. 14, 2016. Daily chart.

The Fed raised short-term interest rates by a quarter of a point yesterday, to the surprise of no one. However the Fed statement showed there are more than two rate hikes planned for 2017, which caught the attention of investors and traders.

ES sold off after the Fed statement calling for three more increases next year. However the pullback did not do any damage to the uptrend.

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The short-term uptrend stretched to the top band of uptrend channel in a stronger technical condition. But given the ultra-short-term overbought condition the market is due for a breather. Yesterday’s interest rate increase could be an excuse for a retracement or a consolidation.

2254.75-55.50 range will be a key zone for today’s trading. A failure to move above it could lead the price to pull back to test yesterday’s low at 2243-42, or lower to 2231-29.50 zone if there is a selling momentum and some follow-through. In any case if the ES holds above 2243 during overnight trading, it could bounce up to 2262.50-65.50 again.

The daily PMO indicator still is in overbought territory. It indicates that ES may have a brief pullback for one or two days to ease the extremely overbought condition.

Support and resistance

Major support levels: 2243.50-42.50, 2232-29.50, 2223-21.50, 2218-16.50
Major resistance levels: 2268.50-70.50, 2279.50-78.50, 2288.50-89.50, 2295.50-96.50

Outlook

Short-term —- Bullish
Medium term —–Bullish
Long term —- Bullish

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