Trading plan for May 4, 2016

160502a-ES-daily

ESM6 May 3, 2016. Daily chart.

ES returned to Friday’s range Tuesday. The price pulled back above Friday’s low area and held above it for closing. At the end of the session ES closed at the middle of the regular hour trading range, although it failed to fill the 2074.25 gap. The last three days have formed a trading range between roughly 2050 and 2075.

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Today 2052.75-50 will be a key zone. As long as ES holds above it during overnight trading, the odds will favor the upside trying to fill yesterday’s gap at 2074.25.

But a move below it could lead ES to go lower than yesterday’s low to shake out yesterday’s afternoon closing buyers.

Today is Wednesday. The settlement for the Wednesday option on the SPX is expected to be under 2075 and above 2040. We may continue to see ES to stay within yesterday’s range, but close in the green, as Wednesday trading ha done since mid-February.

The daily PMO and SSO indicators went down further and continue providing a short-term “SELL” signal. Any bounce shouldn’t last very long.

But the 50-day moving average line at 2035 will act as a strong support. Suggested strategy for today: buy on dips and sell on rallies in the early morning sessions.

Outlook

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

Support and resistance

Major support levels: 2035.50-37.50, 2021-23.50, 2009-07.50
Major resistance levels: 2085-83, 2099.50-2103.50, 2108-10.50, 2116.75-19.00

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