Trading plan for May 5, 2016

160504-ES-daily

ESM6 May 4, 2016. Daily chart.

ES gapped down for a second day. It opened below its prior day’s low (2048) and stayed below it for closing. It appears that the “sell in May and go away” sentiment dominates trading behavior at the moment.

The long side has been holding the price up since the February low, and we expected some kind of profit-taking to show up in March.

Now it is finally arriving at the end of April and the beginning of the unfavorable seasonality period. We should not be surprised.

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The ES could go down a little further, but the ultra-short-term indicators are moving into oversold territory soon. This could bring a brief bounce today or tomorrow.

Today 2035-33 will be a key zone. Failing to hold this zone could change the short-term trend direction, and if it fails a further decline to 2019-20 should be expected. Conversely, holding this zone could push the price back up to Wednesday’s high or fill yesterday’s gap at 2057-60.25.

The daily PMO is chasing down towards the zero line and remains a “SELL” in the short term. But STO indicator is approaching the oversold area.

The the 50-day moving average line at 2035 is below the current price. We could see a small bounce from there.

Outlook

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

Support and resistance

Major support levels: 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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