Trading plan for Dec. 4, 2015

ESZ5 Daily chart

ESZ5 Daily chart

Yesterday the ES followed the German market down after the ECB press conference disappointed European traders expecting a increase in QE and a bigger decrease in interest rates.

The ES gave up the gain made in overnight trading, and broke the 20-day moving average support line and headed for the 40-day moving average. That was in the morning.

In the afternoon sessions, the growing perception that the San Bernadino killings were a terrorist attack sent the ES lower through the 40-day ema line and through the opening price for the year (2055) The price action was bearish. The volume was stronger on the selling side.

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Today all eyes will be on the non-farm payroll report before the market opens. Traders are looking for something that will confirm or deny the Fed talk about a rate increase in December. The current consensus is that the Fed will raise, but the consensus has been wrong before – as it was in Europe yesterday.

In technical terms, yesterday’s selling confirmed that 2105 is the short-term top. We may see a small brief bounce or a sideways movement to consolidate yesterday’s selling. The major resistance zone will be 2075-2078.50. ES needs to stay under this zone for a further decline next week.

2039 is the 200-day ema and 2065.50 is the 200-day sma. ES could travel between those two lines today.

A move below 2037.50 could lead ES to dip further toward 2032.75-31.50 or lower toward 2019-22. A break above 2066.50 could push ES up to 2070-75 zone to bail out the option Calls guys.

Outlook

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

Support and resistance

Major support levels: 2050-45, 2030.50-32.50, 2019.50-22.50
Major resistance levels: 2088-89.50 2105-08, 2114.50-16.50, 2121-23.50