Trading plan for Jan. 5, 2016

160104-ES

ESH6 Daily chart

Happy New Year! Financial markets everywhere in the world were suffering from a hangover in their first trading day, with the exception of gold and bonds. In the US all three major indexes gapped down at the open, tried to rally back, only to then fall again.

Eventually they all managed to bounce in the last half hour, but still closed in the Red.

The short-term trend remains down. Daily momentum indicators — fast line (20ema) crosses below slow line (40ema) – gave a sell signal two weeks ago, and ES followed that selling signal down for the past three days.

Yesterday ES gapped down and stopped at horizontal support from the December low. But daily momentum indicators still are negative and tell us to expect a move at least towards the bottom of the down channel.

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Today we could see a consolidation move above 1998.50 and below 2038.75 to continue balancing out the oversold condition. The double bottom pattern formed yesterday will have a target around the 2020 area, and that area becomes a key line for today’s trading. As long as ES doesn’t break above 2025, the outlook remains bearish. But a move above 2026.50 could push the ES up to fill the gap at 2035.50.

Outlook

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

Support and resistance

Major support levels: 1992.50-90.50, 1982-80.50, 1970.50-72.75
Major resistance levels: 2037.50-39.50, 2056.50-57.50, 2075-74.00, 2088-89.50