Trading plan for Jan. 27, 2016

160126-ESChina declined sharply overnight and dragged the ES down to a low near 1851.25. But right after the European market opened, ES started to bounce back above 1870.25, the previous day’s closing and continued going higher.

This price action was bullish, and forced overnight shorts to rush for cover after the market opened. At the end, ES went above 1895.75 for closing.

The 10-day moving average line has tried to hold the ES down since January 7. In the last three days, buyers continued pushing but failed to change the market direction.

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Hi . Here is the full trading plan for Wednesday: 160127-plan

Today the Fed decision – or even Fed comments – could trigger a stop run in the ES to take out the 1907.50 stops and push the price up to 1921.50-23.50 or higher to the 1948-52 zone. Watch for rumors in the morning,  if the Fed’s tone is dovish or there are hints of a new QE4.

Conversely, any statements suggesting more rate hikes are in store could send the ES back down to 1870-72 or lower to 1850-48 area.

Today’s range should be larger than yesterday’s regular trading range. FOMC day can produce unexpected and sometime irrational moves. Trade with caution today.

Outlook

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

Support and resistance

Major support levels: 1830-1825, 1816-1818, 1800-1795
Major resistance levels: 1907.50-06.75, 1929.50-32.50, 1956.50-57.50