Trading plan for Jan. 28, 2016

160127-ES

ESH6 Daily chart

The Fed kept interest rate unchanged and showed less eagerness to hike interest rates in the future. The central bank is concerned both with the US economy and the faltering stock market. The Fed decision didn’t change the current market direction. It remains down.

The 10-day moving average line continued to hold ES down even after the price spiked up to 1910 during intraday trading hours.

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Yesterday we expected that ES could run up if there was no rate hike. But the Fed statement didn’t encourage buyers enough. Instead selling pressure pushed the price down under the support in the 1870-72 area before the ES bounced for closing.

A potential bearish triangle pattern could replace the A-B-C bounce pattern, which gives a more bearish outlook for the future.

There are only two trading days left in January. Today could repeat yesterday’s move and bounce up to retest the 1893-88 zone one more time if overnight trading holds above 1861.

A move below 1855 will be bearish. ES could go under 1840 a close in the lower range of the month tomorrow.

Outlook

Short-term === Bearish
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