The S&P 500 mini futures had a nice little recovery yesterday after Tuesday’s dump. Now we need to see if the recovery continues, or if the market, which is now back to the intermediate term support/resistance area, will go up or down from here.
The current contract (ESM5) had an inside day yesterday, trading within Tuesday’s day session range, but it pushed the price back up above 2119, which was April’s high and the top boundary of the trading range for the past three months. The price action was bullish – the market went pretty much straight up after the open – and the volume was higher than usual. The futures closed at 2121, up 16 points on the day.
But now we are back in the trading range that had held the price down since late March. So what happens next? Will it pull back down from the congestion area and treat it as resistance, or continue up and treat it like support?
Today
It might do both. The market typically pulls back at least temporarily after a break-out, and then continues in the direction of the initial break-out.
ESM5 made a good break-out last week, and had a strong retracement Tuesday, We still have an upside target at 2166-78, but a drop back down below 2100, perhaps to the support around 2090, is entirely possible.
2096 is the level that stopped Tuesday’s decline. If the pullback is going further, that support will be difficult to break, but it might be revisited, especially if the price stays below 2125 and grinds back down to the 2110-2107 area.
On the upside, a move above 2128.50 today would eliminate any quick return to 2096, and the ES could then move up to the previous high at 2134.
Today we have the release of several important economic reports and two Fed members who will be sharing their insights with the public. It could turn into an interesting day.
Major support levels for Thursday: 2092-89, 2081.50-79.50, 2062-59.50;
major resistance levels: 2134-36.60
To receive free market insights with actionable strategies from naturus.com, click here
ESM5 Daily chart, May 27, 2015
