ESH6 Daily chart

ES rebounded from the intraday low at 1871 and closed up by 33 points yesterday. The volume increased by 5% more than the previous day’s volume. But the price has no new low bottom yet.

Based on the daily chart, ES traded above last September’s low. The short-term oversold condition suggested profit taking. But price remains under the 10/20 ema lines. The pattern still looks bearish. We may see one or two extra days bounce until the short-term oversold condition gets totally solved.

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Download the full trading plan here: 160115-plan

Today is ES option expiration. 1929.50 line will be the first line to watch carefully. This line controls the upside movement. A move above it could continue to squeeze shorts and push price up to 1939-43 or higher up to 1955-57.50 zone (if upside momentum is strong). Holding under 1929.50 could lead the ES to pullback to test yesterday afternoon’s breakout level 1902.75-06.25. A break below 1895.50 will be bearish again. A further decline should then be expected.

Outlook

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

Support and resistance

Major support levels: 1866-62.50, 1856-50.25, 1830-25, 1800-1795
Major resistance levels: 1929.50-32.50, 1956.50-57.50, 1970-65.50