Trading plan for Sept. 4, 2015

150903-ES-dailyES gapped up strong at open in reaction to the ECB press conference. But after all the scheduled US economic reports were released, the price started to slide and continued heading south for the rest of the day. It dropped even further in the early after-hours trading.

Now everyone is looking for today’s non-farm payroll report, to be released before the market opens. The Street is expecting a number under 200k, compared with July’s 215k. A higher number may renew fears of a September rate hike, if the market returns to its good-news-is-bad-news posture.

A potential triangle pattern formation on the daily chart shouldn’t generate too much optimism among buyers. The Bears have defended their resistance levels quite well in the past five days.

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Today ES may continue holding the price above the short-term uptrend line due to option expiration. But upside momentum strength was weakening all yesterday afternoon, which could be a warning that the bounce is almost over.

Today ES needs to hold above the 1925 level to keep the upside momentum alive. A close below 1925 today could open the path to 1900-1898 or lower toward 1875 for next week. We will be watching the first couple of days after the holiday for a sense of direction.

At the same time, the long-term uptrend is getting weaker. Although it is too early to say the uptrend will change, a falling strength is not good for the buyers at this moment. Our trading strategy continues to be “short on bounce.”

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

The major support levels: 1900-03.50, 1850-45, 1828.50-25
the major resistance levels: 1992.75-95.50, 2012.50-2013.50 2032-2035

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