ESZ5 Daily chart, Oct. 1, 2015

ES had a strong rally in overnight trading and surged up almost to 1930. It fell back to earth after the regular trading session opened, but found support at the 1890 level and closed slightly above the regular session open.

The closing price action was quite bullish. But the volume still missed 8.8% from the previous day. Today we have the non-farm payroll report before the open, and that will largely determine if the current rally should continue or pause.

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ESZ5 closed right at the 10-day moving average line. It could move up to Thursday’s overnight high at 1929.75 or further up to the 1935 area – the 20-day moving average – if Fed members continue cheering, as they have been all week.

But if ES fails to move back above 1919.25 early in the morning the price can still pull back around the 1900 level to shake out the weak hands.

1889-90 is today’s support zone. A break below it could trigger small stops below that support and run the price down to 1883.75 or lower to the 1878.50-77.25 zone. For the short term, we should still expect an oversold bounce today.

Outlook

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

Support and resistance

The major support levels: 1850-45, 1830-25, 1800-06, 1775-85, 1750-55;
the major resistance levels: 1931-28.50, 1945-55, 1998.75-95.50