Trading plan for Dec. 17, 2015

ESH6 daily chart

ESH6 daily chart

ES gapped up almost 10 points in the morning session Wednesday, before dropping back down to almost close the gap before noon.

Once the FOMC policy decision was announced – a 0.25% rate increase, the first in 84 months – the price made a wild swing down and up, moving through 25 points in 10 minutes. The move above the 200-day moving average forced the shorts to cover.

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The market may be overdone. If the market pulls back today, the reaction to the 2055 line will help us identify the most likely direction for the next move.

If the market closes today or tomorrow below 2055, the next move is likely to be down. If 2055 holds the price up, we’ll be looking for a move back toward 2100 by the end of the year. The four-year trend line will be a resistance area.

In overnight trading we are watching to see if the trading stays below 2065.50. If it does, a repeat of today’s trading range 2065-2045 is likely, or a smaller range to form an inside day. If the overnight trading weakens it may drag the market down to 2045-46, or lower, to 2035.50-31.75.

Overnight, pay attention to the European market, which was closed before the Fed announcement and has not yet had an opportunity to react. If it rallies strong, ES is likely to rally too.

Outlook

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

Support and resistance

Major support levels: 2031-28.50, 2009.50-07.50, 1992.50-90.50, 1975.50-72.75
Major resistance levels: 2088-89.50, 2105-08, 2114.50-16.50